Are You Doing Enough To Protect Against Financial Fraud?

By Mark Lowers,

Yet more evidence of the prevalence of financial fraud against organizations has emerged from a recent poll by Kyriba. The poll found that almost 80% of organizations had been victims of fraud.  The very high proportion of victims is startling in itself, but it is consistent with information we have presented in previous posts that organizational fraud is a global problem, costing 5% of top line revenue annually.

Almost 30% of the respondents to the Kyriba poll reported suffering financial losses, but we think this is a conservative number in this context. Organizational fraud is a hidden crime that sometimes is difficult to detect, even long after the fact.  When organizations do detect fraud, they may have incentives to minimize publicity about the crime, so underreporting is probable.

The poll includes some indications that the fraud was even more costly than reported.  5.6% of respondents reported that they had been targets of fraud but did not know if they had suffered losses, while almost 14% did not even know if they had been targets or not.  In fact, a little less than 8% reported that they knew they had not been victims, and it’s a good bet that a few of these simply hadn’t found out yet. … Continue reading

How Are You Handling This Year’s Emerging Risks?

By Mark Lowers,

cyber crime fraud

The Edward Snowden case and the theft of Target customer data have both driven home the point that cybersecurity is an emerging, and rising, risk issue for both companies and political entities. But there are other risks that emerge as rapidly-changing multi-market regulatory and business interactions redefine the landscape.

Every year business consultant CEB (Corporate Executive Board) issues a list of emerging risks that sharp companies need to address to stay ahead of the game. This year they recommend managers pay special attention to these 10 specific risks: … Continue reading

ACFE Highlights the Biggest Fraud Challenge in 2014

By Mark Lowers,

cyber crime fraud

What do NSA and Target Corporation have in common? They both have enormous databases of sensitive information about individuals that have been penetrated by the likes of Snowden, Wikileaks, and worse criminal conspiracies. According to James D. Ratley, President and CEO of the Association of Certified Fraud Examiners, cybercrime is one of the biggest emerging fraud threats in 2014.

Ratley mentions hacking schemes like the one that shocked Target, as well as other malicious activities like malware and phishing schemes. He rightly says that these schemes can be foisted on individuals, small or large businesses, or any type of organization.

But we think there is a very good reason why cybercrime could be the biggest emerging fraud threat for years to come. It is rooted in the fact that organizations will not forego the tremendous power of networked computers and huge databases, and these are rapidly evolving. Every innovation in automated business processes creates new opportunities for hackers. The prize at stake is huge. … Continue reading

2013 U.S. ATM Fraud Forecast

By Lowers & Associates,

According to the Nilson Report, the world’s leading source of news and proprietary research on consumer payment systems, the United States currently accounts for 47 percent of global credit and debit card fraud even though it generates only 27 percent of the total volume of purchases and cash. Payment card fraud losses totaled $3.56 billion in 2010 in the U.S. from all general purpose and private label, signature, and PIN payment cards.

Unfortunately, ATM fraud will continue to challenge the financial landscape for 2013. Most experts agree it is due to the lack of chip and pin (EMV) implementation in the U.S. Data from the Europol Payment Card Fraud 2012 Situation Report further illustrates the impact. As European countries continue their EMV migration, skimming losses decrease.

ATM Fraud – An Internal Viewpoint

By Lowers & Associates,

ATM

Defined as the intentional act of trickery to unlawfully obtain funds from an ATM, most people associate ATM fraud with external crime, where the card or card number and associated PIN are illegally obtained by outside individuals, gangs, or even more sophisticated organized crime syndicates. Considered a form of identity theft by the Federal Trade Commission (FTC), while identity theft had been holding relatively steady for the last few years, the FTC cites a 20 percent increase in ATM fraud in 2011 alone.

From the onset of the proliferation in the use of ATMs, less sophisticated (but equally effective) methods of ATM fraud include such means as card trapping, skimming, and keypad overlays.  Trapping, as the name implies, is where the customer’s card is somehow trapped by the perpetrator only to be retrieved later. Skimming is where the perpetrator has put a device over the card slot of an ATM, which reads the magnetic strip as the user unknowingly passes his card through it.  These devices require the use of a miniature camera (inconspicuously attached to the ATM) to read the user’s PIN at the same time.

… Continue reading