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Top Fraud Predictions for 2015: Technology Will Shape the Fight

December 17, 2014

Gerry-Zack.pngTechnology will give fraudsters an edge in 2015, but it will also provide new tools for organisations and investigators, according to three experts from the Association of Certified Fraud Examiners (ACFE) who were asked for their top fraud predictions for 2015.

The experts weighed in on digital currencies, information security and other issues that will help shape the effort to prevent and detect fraud in the new year.

1) Technology will increase the sophistication of fraud schemes.

This is an existing trend that will accelerate in 2015, according to ACFE Regent Gerard Zack, CFE, Managing Director – Global Forensics for BDO Consulting. “More and more we are reacting to reports of fraud with, ‘how did they do that?’” Zack said. “It’s a reflection of schemes becoming more complex and capitalising on technology, including some of the new technology deployed by companies in the interest of improving efficiency. While simple frauds still exist, we are seeing a distinct proliferation of more complex fraud schemes.”

2) But technology (like data analytics) will also help catch tomorrow’s frauds.

 Zack is quick to note that for fraudsters, technology is a double-edged sword – as it will also be leveraged by the professionals trying to catch them. “There will be more breakthroughs in the use of technology to detect fraud – particularly in the use of visual analytics and also in the use of tools to mine unstructured data. Tools that were thought of as cutting edge just a year or two ago will seem ancient in another year or two.

3) Improving information security will be a major priority.

More massive data breaches, like theBruce-Dorris.jpg ones that have stricken Home Depot, Target Corp. and other large retailers over the past two years, are likely to occur in 2015, according to ACFE Vice President and Program Director Bruce Dorris, J.D., CFE. “These breaches have exposed widespread vulnerabilities among organisations that store and maintain personal information, putting millions of individuals at risk,” Dorris said. “Considering that storage of data continues to grow at an exponential pace, more trouble lay ahead – and there is an increasing need for information security and protecting against data breaches.

4) Digital currencies will shake up fraud risks for retailers and consumers.

An increasedJacob-Parks.jpg acceptance of bitcoin and other digital currencies among merchants will signal a shift in fraud risk, according to Jacob Parks, J.D., CFE, Associate General Counsel at the ACFE. “Vendors/sellers face reduced fraud risks from ‘friendly fraud,’ where customers fraudulently cancel credit card or bank payments after receiving an item,” Parks said. “Digital currency transactions are generally permanent, which makes this scheme untenable. However, consumers face an increased risk of fraud by dishonest sellers, since the transaction is often not insured or protected by an agreement with a financial institution. Additionally, consumers using digital currencies have a reduced identity theft risk because the transactional data stored by the seller cannot be used by malicious parties to charge the customer (this also means vendors have a reduced risk of data breaches involving these customers).”

5) With protections for whistleblowers increasing, more people will step forward to report fraud.

Dorris said that a decade ago, few countries had whistleblower protections. However, increased awareness about the harm caused by major frauds at organisations has led to legislators looking to whistleblowers to prevent or mitigate such crimes. “France, South Africa, South Korea, Australia and other countries have all taken substantial reforms to protect whistleblowers, particularly those who identify crimes in the public sector,” Dorris said. “U.S. policy has moved beyond simply protecting whistleblowers; it now has several programs that financially incentivise whistleblowing regarding bribery, tax evasion and corporate accounting fraud. The programs are largely still in the beginning stages, but have already had major payouts.”

While those are the top predictions for 2015, the list doesn’t end there. Here are two more prognostications for fraud in the new year:

There will be a re-emergence of financial statement fraud.

While Enron, WorldCom and other major financial statement frauds are starting to fade from the public consciousness, there may be more such accounting frauds on the way, according to Zack. One indication is the effort being made by the Security and Exchange Commission (SEC) to step up enforcement in this area.

Credit card security features will continue to evolve.

This prediction comes from the ACFE’s 2015 Fraud Examiners Manual: “As the United States migrates to smart cards, several variations will exist until a single standard is adopted. As most merchants are not yet equipped to accept smart cards, many credit card users carry hybrid cards that include both a microchip and a magnetic stripe. Moreover, these cards may or may not require a PIN to complete a transaction. Embossed credit cards are slowly being supplanted by smooth credit cards in order to prevent physical card imprints. Additionally, local bank branches are able to produce unembossed debit cards within minutes, which eliminates the need to send cards through the mail.”

  1. Cosmin

    I don't think that CSR knew what she was talking about.There is fraud aletrs and there is freezing a credit report but there is no such thing as a credit protection statement Even if you had a fraud alert or had frozen your credit report, a company that you have an existing account with can still pull your reports.You might call back and speak to a different CSR.When asking for an increase, you should ask about a guideline credit limit increase with no hard pull

    Apr 1st, 2015

  2. Lucas

    Credit protection sttemeant is the same as fraud alert. Fraud alert has many aliases: victim's sttemeant, fraud alert sttemeant, consumer sttemeant.I suggest you to check credit report immediately.

    Apr 1st, 2015

  3. Sabita

    For me, the advantage is no supisrres at the end of the month, as when the credit card bill shows up. Except for gasoline, the fee for a debit transaction is usually absorbed by the merchant. And with credit cards, there is a great temptation not to pay off the whole bill each month, to let a balance accumulate, along with interest charges. That's not an option with debit cards. True, using a credit card at least once a month does build up a credit history, but it's not necessary to use the credit card for every purchase to have the same effect.Note: if you're making an over-the-counter purchase with a debit card and some annoying customer is crowding you, possibly to catch a glimpse of your PIN, just use the card as a credit card, so that you use your signature instead of your PIN (or loudly ask the offender to step away from the counter while you complete your transaction, which the clerk should be doing on your behalf but probably won't, even a pharmacist). [url=]vfmmtlfjtrv[/url] [link=]uzhlobzf[/link]

    Apr 3rd, 2015

  4. Shaik

    Well, I guess if you like the confined feneilg of a jail cell, go ahead and lie. But, remember, when you logged onto that gambling site, they recorded your IP# LOL There are ways to trace that it was YOU who used the card. And, to top it off, online gambling is illegal in the US. Go ahead and lie then white knuckle it while you wonder when they will be sending over the sheriff to take you away.

    Apr 5th, 2015

  5. Chapisz

    it will be forwarded to the stricueies and loss prevention departments where they will launch an investigation. That investigation will contact the gambling website for usage records which include IP addresses. They'll follow those to your ISP, who with a court order will be more than happy to identify you. You get busted for fraud, blacklisted, and have to pay all the money.Unless of course you used a proxy server the entire time. [url=]whicnkboq[/url] [link=]fjsneyrg[/link]

    Apr 7th, 2015

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