| Business Fraud is Expensive |
Business fraud is a real threat to businesses today. No business, large or small, is immune to fraud schemes; not even yours. You may not even be aware of ineffective schemes that were summarily thrown away. But some frauds will stick to your business and then grow. Losses due to fraud are devastating and have a long-lasting effect on your company.
Not being understood or recognized as a threat, the effects of fraud on the performance of a business have been underestimated for generations, and the costs associated with fraud have been understated. Efforts to prosecute fraudsters in Canada proved impossible in 1998, as I was told that fraud is a civil matter between the parties.
Today the impact of fraud on business is widely recognized. Headlines scream, Woman Embezzles $250,000; Church worker Takes $400,000, xxxx, a popular restaurant is forced into bankruptcy due to internal theft. Fraud reduces profits, affects growth decisions, causes businesses to fail, accelerates job loss, and damages our economy. Fraud kills off... Read More
| $994 Billion is the Estimated Fraud Losses for Businesses|
On average the typical U.S. business organization loses about 7% of its annual gross revenue to fraud. Since the U.S. gross domestic product was $14.196 trillion dollars in 2008, the best estimate for fraud losses is $994 billion.
How accurate is this figure? Let's consider just one of the elements of fraud: secrecy. Secrecy is an essential element of business fraud. Unethical employees discover ways to convert money or other valuable company items for their own use. This is the essence of embezzlement: the taking of cash, property or services entrusted to an employee. Many fraudsters operate in the shadows of a business. Perpetrators often rationalize their thefts with unfulfilled promises to "pay it back." (It must be easier to swallow if one tells oneself it is just a loan). After he is caught the fraudster will minimize the total amount taken over the years or months that the scheme was in operation. He does this to... Read More