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2010 staff fraud trends

Insider fraud remains high but methods change.


2010 staff fraud trends

Insider fraud remains high but methods change.

Analysis of frauds recorded on the CIFAS Staff Fraud Database during 2010 reveals that cases of proven insider fraud remained as high as in the preceding year (with exactly the same number of staff frauds recorded in 2010 as in 2009) but that there were some interesting shifts in the types of fraud being identified. Of particular note are:
• 52 cases of staff unlawfully obtaining or disclosing personal data (a 62.5% increase from 2009) a significant surge in job applications containing serious material falsehoods (for example, not declaring previous convictions or seriously misrepresenting previous employment history or  professional qualifications)
•  27% decrease in the number of cases of dishonest actions by staff (to obtain benefits by theft or deception) compared with 2009. 
No decrease in levels of staff fraud
CIFAS Communications Manager, Richard Hurley, comments,“The economic challenges that have faced us all as individuals throughout 2010 pose problems for organisations too; so the fact that CIFAS Members are seeing just as many cases of staff fraud as last year demonstrates that insider fraud is not just a momentary ‘flash in the pan’ of criminal behaviour, but a very real and very serious threat. The effects of staff fraud, of course, are more than just financial; as staff and customer morale and reputation all suffer too.”
Staff Fraud and serious criminality
The 62% increase in instances of staff unlawfully obtaining or disclosing personal data reveals a much bleaker side to the staff fraud problem, as these actions are frequently linked to serious and organised criminal behaviour. CIFAS Staff Fraud Adviser, Arjun Medhi, comments: “People are increasingly aware of the value of personal data, and these figures demonstrate that such data is now equivalent to cash in the till. Serious criminals target data, and the increase in incidents of staff stealing personal data demonstrates motivations far more sinister than those who may be tempted to try and steal cash. With cases of identity fraud numbering over 100,000 per year – our very real concern is that this increase in staff stealing personal data is directly linked to the subsequent crime of identity fraud and identity theft.”
Changes in the types of fraud committed: the effects of economic uncertainty?
In a time when economic uncertainty has dominated the headlines, a surprising fact is that the number of cases of staff committing dishonest actions to obtain benefits by theft or deception (for example, stealing cash from a customer’s account, falsely inflating expenses claims, falsifying work records for bonus payments etc) has reduced by 27% when compared with the frauds recorded in 2009.
Richard Hurley notes:“It is important to note that instances of this kind of fraud still make up almost 50% of the staff frauds recorded in 2010, however, so this still remains the most widespread risk for all employers, but the pervading economic gloom, combined with this reduction, indicates a change in attitude. Whereas previously many otherwise honest people perceived ‘no other option’ than to resort to fraud in order to make ends meet or maintain a lifestyle, as the economic gloom continues, the spectre of unemployment looms larger than before. The risk of losing a job, therefore, appears to be providing an antidote to many who could potentially be tempted to commit fraud in such cases.
“As a counter-balance, this uncertainty is also shown by the 82% increase in 2010 of cases where applicants have attempted to gain employment fraudulently. This increase is perhaps unsurprising in the context of rising unemployment and a more competitive job market, but any rise in people trying to defraud their way into jobs must be treated with extreme caution. As businesses also struggle, the risks associated with employing someone who is not what they claim to be professionally, are huge.”

*The Retail Bulletin is organising its 2nd Loss Prevention Summit, September 13th in London W1. If you are interested in attending  as a delegate or want to explore the sponsorship and Networking opportunities, please email:

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