As the COVID-19 pandemic created global chaos in 2020, criminals took advantage of this instability to increase fraud and monetary schemes worldwide. The following are fraud schemes that are predicted to plague Canada and other countries around the world in 2021.

COVID-19 has affected—and will continue to affect—the business environment in countless ways. Travel bans, employees working remotely, increased reliance on technology, and economic uncertainty have become a reality for many organizations worldwide. And while these and other hurdles present numerous logistical and operational challenges, they also open the door to the increased pressure, opportunity, and rationalization that can lead to fraud.

1. Cyber fraud

Cyber fraud is the most popular type of fraud. A reliance on remote working leads to a reliance on digital tools. While the workplace’s digital transformation does bring increased opportunities for profit and expansion, it also increases risks. Digital fraud steadily increased in 2020, and there is a good probability of the same schemes that were popular in 2020 will increase in popularity in 2021.

Some common forms of cyber fraud can include:

Malware: Malware is generally code that’s made to affect or attack compromised computer systems without the user’s consent.
Ransomware: Ransomware generally blocks all the access to a victim’s data and deletes the information if a ransom is not paid.
Password cracking: Password attacks are simply means to decrypt or even attempt to obtain a user’s password with the help of criminal intentions. Crackers can use dictionary attacks, password sniffers, or even cracking programs in such cases. These attacks are conducted by recovering those passwords that are exported or stored through computer systems.
Phishing: These attacks are social engineering attacks that are generally used to steal precious data such as login credentials or credit card numbers as attackers pretend to be trusted individuals and trick victims into opening malicious links.

Cyber fraud is an ever-evolving crime. For a more extensive list of cyber fraud schemes, click here.

2. Fraud by vendors and sellers

Most money errors involving vendors can be quickly corrected, but you should be aware of several billing schemes.

Fictitious Billing: Fictitious billing is when the fraudster creates a fictitious vendor, which bills the company for payment. The payment is then diverted to the fraudster. This can be accomplished with nothing more than a fake name and a post office box.
Duplicate Invoice Payments: Duplicate invoicing is where the fraudster manipulates a legitimate vendor’s account, causing the double payment of a legitimate invoice. The fraudster diverts the payment to a bank account under his control.
Check tampering schemes: These schemes occur when an employee physically manipulates checks to be deposited into a bank account under his control. This could involve forgery, altering payee information, or issuing inappropriate manual checks.

3. Payment fraud

Payment fraud is any type of false or illegal transaction completed by a cyber-criminal. The perpetrator deprives the victim of funds, personal property, interest, or sensitive information via the Internet. Payment fraud is characterized in three ways:

  • Fraudulent or unauthorized transactions
  • Lost or stolen merchandise
  • False requests for a refund, return or bounced checks.

For more information on this type of fraud, click here.

 4. Health care fraud

Most medical providers are honest and work hard to improve their patients’ health. However, a few want to increase the size of their bank accounts illegally. Learn some basic health care provider schemes and how to deter them from taking some easy money.

Eight common health care provider fraud schemes:
• Billing for services not rendered.
• Billing for a non-covered service as a covered service.
• Misrepresenting dates of service.
• Misrepresenting locations of service.
• Misrepresenting provider of service.
• Waiving of deductibles and/or co-payments.
• Incorrect reporting of diagnoses or procedures (includes unbundling).

For further information on health care fraud, visit the ACFE source article here.

5. Identity theft

There are two types of identity theft:

Traditional Identity theft — Traditional identity theft is where a fraudster steals an individual’s personal information and pretends to be that individual. The criminal then has access to the person’s name, SIN number, and birthdate to access bank accounts.

Synthetic identity theft- Synthetic identity theft involves a fraudster using a fictitious identity. They use a combination of real and fabricated personal information to create a new identity. First, they steal a person’s real SIN number with a fake name and date of birth. Uses it apply for credit cards to build a credit history and apply for a larger loan, which is never repaid.

For more information on identity theft, visit the ACFE source article here.

What can be done about fraud?

Combating all types of fraud starts with educating your workforce on what fraud looks like and identifying common tactics. You can begin to protect yourself by increase anti-fraud staffing and investment in anti-fraud programs. Many organizations are vulnerable to fraud because they do not implement a system of adequate internal controls. We can help you to review your existing controls, identify any existing gaps, and provide recommendations.

Ready to act? Contact us for a free, confidential consultation.

Source: Association of Certified Fraud Examiners (ACFE).