Inside fraud goes ‘low and slow,’ burns businesses for years

Most inside fraud is committed using the barbecue approach – “low and slow.”

A recent study conducted by Carnegie Mellon University’s CERT Insider Threat Center examined 80 instances of insider fraud. What researchers discovered is that the most damage to companies and their clients was done when criminals pilfered small amounts over extended periods of time. This makes it easier for them to evade detection and cause serious harm.

If you’ve never watched the Food Network, low and slow is the best way to cook barbecue. Really, it’s the only way. You get the juiciest meat and best flavor. When miscreants apply this approach to fraud, they get the same result. There’s no sudden flare-up that catches anyone’s attention and they can usually make off with more of your money than if they tried for one big score. Fraud detection efforts have to account for this if they are to be successful.

The study’s findings showed that it takes an average of nearly 32 months for a company to uncover impropriety on the part of a trusted employee. That’s almost three years of them defrauding both you and your clients. Furthermore, of the cases studied, the bottom half averaged $382,000 in terms of financial losses. The upper half registered an average of $479,000.

“As long as there are institutions that hold money, internal and external adversaries will make every attempt to subvert control mechanisms to illegally profit,” the study said.

The above statement is true, even though no one wants to believe that someone they trust would steal from them or their clients. But, if you close your eyes to the problem, someone is likely to steal the change right out of your pockets while you’re not looking. Fraud prevention has to be on every business’ radar. If it isn’t, imagine the monetary and PR damage that 32 months of illegal and malicious activity from within your own walls can do.

In the culinary world, low and slow makes for great barbecue. In the business world, it’ll just leave you burned.

John Sileo is a fraud detection and prevention expert and will be hosting a FREE Fraud Webinar on Thursday, January 31 at 2 p.m. EST.

Posted by Identity Theft Speaker John Sileo in Fraud Detection & Prevention and tagged Fraud Detection, Fraud Prevention.