Is Fraud Ignored More Because It Is A Hidden Crime?

There is no doubt that the scale of fraud is very large. Yet most people give the problem very little thought as they go about their daily lives. The trouble is that this is a hidden crime that can impact most people on a number of levels.

The trouble starts with the fact that whenever anybody wants to steal money, they will try to do so without getting caught. This may seem obvious, but their efforts will lead to some sophisticated frauds intended to deceive victims into parting with their wealth. They will keep going, hidden from view, for a very long time and sometimes never be discovered. Consequently, as a hidden problem it is difficult to know the quantity of losses or how it is affecting people.

Those that think fraud is a problem for businesses are mistaken. Businesses are the lifeblood of society and the economy. They provide jobs and wealth for many people. When a business fails the employees lose their jobs and often may have difficulty finding new employment. When a director runs a company fraudulently, burdening its trading activity by diverting profits to his own pocket, so that it eventually fails, it is not just the creditors and suppliers that lose out but many others as well.

It is interesting to note the converse of this where businesses are set up as scams in the first place, and the workers are willing participants. For example, support publishing companies that prey on small businesses and individuals providing worthless advertisements in useless publications rely on the willing participation of their workforce. The workforce is rewarded by their remuneration which is usually paid gross. They are supposed to deal with their own tax obligations but never do. The business is a shell for tax fraud as well as deceiving its customers.

Many such companies approach individuals who find themselves in a position where they are repeatedly asked for payments for products that they do not really want, often believing they are supporting a good cause or charity and are reluctant to back out. The reality is that though they think they are paying for something real, they are being defrauded.

Many frauds exist in everyday life that people are ignorant to, yet they can have a huge impact on them. Some companies make it very hard for people to cancel payments for services they no longer want. Eventually the victim discovers the correct department to approach by which time he has either lost enthusiasm or another month payment has been taken. A supplier might take an extra payment after the end of a contract and wait for the complaining customer to call. Often apathy means that a customer does not bother for a small additional payment, and when a business deals with 1000s of such customers, such small errors and "oversights" can add up to massive profits.

Sharp business practice is all around us. Companies fail all the time causing hardship for many and then the fraudster will also attempt that direct attack. Nobody wants to be obsessed with protecting their money, but some simple precautions might save you from the impact of the criminals. For example, don't put all your eggs in one basket, check the credentials of those you deal with and be alert to the possibility that the fraudster is the seemingly genuine and generous person that wants to help you!


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Mark Jenner is a forensic accountant specialising in criminal defence. He is a Fellow of the Institute of Chartered Accountants in England and Wales, a Certified Fraud Examiner and has a Masters Degree in Fraud Management. He advises companies on anti money laundering matters, fraud investigation and how best to protect themselves from fraud.