How many types of fraud are there?

How many types of fraud are there?

Fraud is something that can be detrimental to any organization, debilitating its finances and possibly even ruining its viability. While many kinds of fraud exist, there are five that are especially virulent.

  1. Financial Statement Fraud

While not as common as some other forms, this fraud is still prevalent enough to note. This type of fraud involves bluffing about an organization’s revenue, earnings, assets, and liabilities. For recent examples of companies that committed this sort of fraud, one need only look up the long-gone entities known as “Enron” and “WorldCom.”

  1. Misappropriation of Assets

This is when people manipulate earnings, skimming off the top and intercepting income before it goes into the company’s coffers. This type of fraud is very hard to discover because there is rarely any paperwork to confirm the suspicion, making it one of the most commonly performed frauds. “Assets” can also include non-money elements of a company, such as corporate cars and the like.

  1. Stealing Intellectual Property and/or Trade Secrets

As information and technology continue to become dominant forces in the world, this sort of fraud increases in occurrence.

  1. Banking, Healthcare, and Insurance

These are three industries that involve billions of dollars. This is where false health and business insurance claims and faked bankruptcies fall.

  1. Consumer Fraud

Consumer fraud includes people being duped by a con man, unsavory telemarketers, phishing attempts, identity theft, e-mails of foreign princes seeking to transfer funds and so forth. Consumer fraud continues to be an issue, either due to the predatory behavior of a breached system or filing a false tax return that ought to give the thief a significant refund check. Companies can also be subjected to e-mail phishing scams; spear phishing, for example, is the practice of sending Trojan e-mails to employees in a business’ department in the hope that they click the dangerous links embedded within.

Fraud can take multiple forms and ruin an organization in a variety of ways that go beyond finances. Understand your vulnerabilities and work to strengthen them against fraud.