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Fraud risks on the rise

SUPERANNUATION and mobile telephony have been identified as two areas likely to contribute to increased corporate fraud.

These new categories of fraud were highlighted by companies and institutions surveyed recently by KPMG.

The survey found that the top concern continues to be identity fraud, such as credit card fraud and use of false identities, which is the single largest type of fraud in Australia.

Speaking after a fraud seminar in Perth last week, KPMG Forensic director Dean Newlan said the growing pool of superannuation savings made it a clear target. He said fraudsters would make false applications for benefit payments after obtaining details of super fund members with ‘unpreserved’ savings.

This would typically necessitate working with an insider with access to account information.

Mr Newlan said the growing use of third-generation mobile phones and other wireless devices would make it harder to track people performing fraudulent transactions via the Internet.

The use of stolen phones to conduct fraudulent transactions was an added concern.

Acting Detective Inspector Paul Langdon said the WA police service received 500 complaints representing 2,300 fraud offences last year.

He told the fraud seminar the service was currently investigating 200 offences worth $42 million.

Mr Langdon said the popularity of fraud was reflected in the trend towards home burglaries targeting only credit cards and unpaid utility bills.

Mr Newlan emphasised that a lot of fraud is remarkably simple.

“You’d think fraud needs to be sophisticated but it doesn’t, it can be very simple,” he said.

He gave the example of an Australian business that was due to make a $4.8 million payment, via electronic funds transfer, to a major supplier.

On the Friday before the scheduled payment, a fraudster, purporting to be the supplier, sent a letter on fake stationery stating that the money should be sent to a new bank account. The fraud was detected only when the genuine supplier subsequently asked why it had not received its payment.

Mr Newlan said a simple process of double-checking should have been sufficient to identify the fraud before it occurred.

He added there were numerous smaller instances of fraud using false invoices.

A process of data matching would tackle this problem, since most fraudsters were employees who put their home address on the false invoice.

Mr Newlan said vetting or cross checking would also help to cut down the “dramatic rise” in the misuse of corporate credit cards. He recommended the newly released Australian Standard on fraud and corruption control as a good starting point for businesses wanting to tackle the issue.

It emphasises the importance of staff awareness, since other staff often see the activities of in-house fraudsters but do not recognise it as fraud.

 

 

 

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