April 26, 2016
Even though the US is expected to be ahead of the world in terms of cybersecurity and technological advancements that are able to protect organizations and sensitive data, the actual situation is quite dramatic. As consumers, we may be kept in the shadows through great PR efforts, but cybersecurity companies have certain expectations about the level of fraud this year.
The expectations of professional are especially relevant now after the recent event with Bangladesh Central Bank, where $81 million were stolen with SWIFT software on the bank’s computers. SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, is a cooperative owned by 3,000 financial institutions. If such a massive and powerful organization couldn’t defend its network, professionals would be right to expect 2016 to bring more cases.
Cybersecurity companies Kroll has recently published a report with insights and data on fraud across regions in 2015/16. In the overview of fraud data in North America, the report has indicated that in 2016, 75% of companies in the US will be affected by fraud – close to the level of 2015. As a result, the average loss of revenue is estimated to be around 0.9%.
The report contains the results of a survey performed by the publisher, and one of the most interesting data points is related to the source of fraud. Impressively, 40% of people surveyed in the US have indicated that in the past, the perpetrator of the fraud was senior or middle management. For comparison, the global average is indicated to be at 36%.
Another interesting hallmark of fraud in the US is that it often involves business counterparties outside the firm. According to the report, in 2015, vendor fraud affected 19% of American companies, which is the second most common fraud. More impressively, in cases of information theft, vendor or supplier fraud played a major role almost half of the time (46%). Moreover, a joint venture partner was a leading player in 13% of cases of US businesses affected by fraud with a known perpetrator in the past year.
Fraudulent activities across industries happen in the US every day. In fact, just this Monday (April 25) the US Department of Justice reported five fraud cases and will probably add more by the end of the day. The Internal Revenue Service has also published cases of financial fraud in 2016 with significant funds involved.
Financial fraud is such a massive issue in the US that fundamental transitions ought to happen to change the situation. In fact, the EMV-transition was reported to be a result of the dramatic situation with payments fraud. An omnichannel payment platform solution provider, Worldnet, recently performed a survey and published results indicating that 100% of those interviewed believed that fraud was the key motivator behind the US card industry’s decision to migrate to the EMV standard. With card fraud hitting an all-time high of US $8.5 billion in 2015 and fraud beginning to migrate to the US market from EMV-compliant markets such as Canada and Europe, industry professionals recognize that now is the time to act.
The Association of Certified Fraud Examiners has recently published predictions on types of fraud businesses should expect to encounter in 2016, listing eight types of scams. Among other possible victims, consumers and banks should expect to face cases of identity theft, fraud related to credit repair, Internet money laundering and bank draft scams.
Another financial association, AFP, recently published a report on fraud vehicles, emphasizing that in 2015, checks were holding the first place and wire transfers were the second most popular vehicle of payments fraud with almost half of the organizations exposed.