Fraud involves a variety of crimes and schemes, from identity theft and phishing scams to mortgage fraud and even investment-related frauds. These frauds can range from minor misdemeanors to major felony crimes. They are often associated with white-collar crime and can occur for many reasons, such as greed, lack of money or coercion.
There are two main types of fraud: organizational and individual. Organizational fraud is where criminals target organizations, such as banks or businesses. It’s often perpetrated by insiders or through complex networks of criminals. Examples include financial fraud, insurance fraud and bribery. Individual fraud is when criminals target individuals, and is most often committed through phishing or social engineering techniques. It includes identity theft, phishing scams, prepaid card fraud and advance-fee scheme fraud. Individual-level fraud also includes Ponzi schemes, lottery and sweepstakes fraud, unauthorized wire transfers and tax evasion.
The element of Pressure is the driving force behind fraudulent behavior, and it can come from within or without an organization. Within an organization, it can be the pressure to meet sales quotas or bonuses tied to performance. Outside of an organization, it can be the drive to cover debts or a gambling problem. The element of Opportunity is the circumstances that allow fraud to occur, and it can be as simple as a weak internal control or the existence of a legal loophole.
The complexity of modern business transactions and the evolution of fraudsters makes it difficult for organizations to stop fraudulent activity. Clever criminals adapt and evade detection using complex tactics, like synthetic identities that combine stolen or false elements with real ones to hide their activity. Detecting these new threats requires multiple tools, including a platform that uses graph algorithms to look at the broader context around people and their transactions.