The demand for UI benefits, cyber-enabled crime, and evolution of fraud are among the latest trends in the national fraud epidemic. Several fraud recovery experts share these trends and more. To learn more about the evolution of fraud, read on. Posted below are excerpts from their articles. This is a continuation of the previous article, "Fraud Recovery Experts Reveal The Latest Trends in National Fraud"
Cyber-enabled crime
The prevalence of cyber-enabled crime is increasing at a staggering pace. Since the first lockdown in March 2010, fraud recovery professionals have seen a significant increase in both consumer and investment fraud. The numbers also increased in advance fee and investment fraud, but they did so only to a very modest degree. Fraud recovery experts have a lot of work to do to combat this growing problem.
The increasing prevalence of cyber-enabled crime is requiring new types of investigation and strategic partnerships. Fraud recovery experts must master new technologies and skills to protect consumers and businesses from these cyber-criminals. Experts must understand how both internet and financial sectors work and the technologies that underlie them. Cyber-enabled crime has created a pandemic for fraud recovery experts.
Several factors may influence crime opportunities. COVID-19, for example, may affect how much money people spend on online shopping and gaming. The use of social media and PBX devices has been identified as a potential predictor of online fraud victimization. However, there is no clear evidence that digital technology is the culprit behind the rise of fraud. Ultimately, it is the responsibility of fraud recovery experts to investigate and mitigate fraud cases.
Although there are significant changes in offline crime, these changes have only been temporary. After the COVID-19 lockdown, crime patterns returned to pre-COVID-19 levels. Changes in online behavior have not been limited to the pandemic; the changes could have long-term effects on cybercrime. The future of fraud recovery professionals depends on these changes in crime.
While the number of crimes reported may be high, there are many other factors that may hinder the accurate assessment of cyber-enabled crime. For example, police-recorded crime data may contain measurement error. In addition, data availability may mask internal heterogeneity. Therefore, future research should be undertaken with smaller temporal units and offenders in order to examine the extent to which these changes can affect fraud.
In addition to the increased complexity of cyber-enabled fraud, law enforcement is now focusing on recovering funds for victims, improving communication between public and private sectors, and preparing for the next pandemic. Fraud recovery experts are also studying the evolution of fraud over the past two years, which has shifted from the theft of PPP loans to unemployment scams. Moreover, there is a growing focus on stimulus programs, which may be exploited by criminal organizations.
The results of the study will contribute to an understanding of crime trends in the mid-term, as well as identifying how a pandemic affects crime rates over the long term. It will also help strengthen the evidence base for policy and practice. So, fraud recovery professionals can better protect their clients from these threats. So, why wait to see how cyber-enabled crime will continue to affect your industry?
Demand for UI benefits
The demand for UI benefits has skyrocketed recently, fueled by unprecedented federal investments in the program. This made UI benefits an attractive target for criminals, who took advantage of easy-to-steal personally identifiable information. Many states, particularly those that had not previously processed UI claims, struggled to implement new programs, exposing many of their internal fraud controls to fraudsters. Because the government-run benefits program is subject to a heightened risk of fraud, it is extremely difficult for states to implement new UI programs that will protect against fraudulent claims.
Government agencies are already under tremendous pressure to provide fast service to the public, but the unprecedented surge in UI benefits has uncovered gaps in their fraud mitigation efforts. The fraud recovery efforts that are underway are proving to be ineffective, and a significant portion of the $26 billion in benefits funding has been lost through fraudulent claims. As a result, the national unemployment rate rose from 4.4% in April 2019 to 14.7% in April 2020, the highest monthly increase since 1948. As a result, state employment services are overwhelmed with claims and awaiting approval.
The federal government has been providing oversight and direction for UI programs. The Office of Inspector General (OIG) conducts audits to strengthen program integrity and conducts criminal investigations against fraudsters. The OIG has been conducting fraud investigations to protect the government and the public from fraudulent claims since 2011. As the OIG's last line of defense, this investigation is difficult and time-consuming.
While UI has been vital in the past decade, policy reforms are needed to improve access to the program. A new law requiring the application of a more rigorous fraud recovery process may make it more difficult for workers to claim benefits. Further, new policy changes could improve access to the UI system for historically underserved populations. Furthermore, robust outreach may be required to address disparities in coverage.
The OIG has recommended several measures to improve UI benefits. One of these initiatives is to mandate SWAs to use UI penalty collections for UI administration. This is consistent with previous OIG findings and recommendations. Further, the OIG has also recommended that the DOL mandate SWAs implement more stringent fraud prevention measures in their guidance documents. However, this change is likely to have limited effects for UI claims.
The OIG has also recently revealed that the demand for UI benefits due to fraud recovery experts is at an all-time high. Its annual volume of UI investigative cases has increased by 1,000 percent since the pandemic began. The volume of these cases is now accounting for nearly 94 percent of its investigative case inventory - a significant increase from just a few years ago.
Evolution of fraud
As the number of fraudulent activities in the US approaches $100 billion, the U.S. Secret Service has appointed Assistant Special Agent in Charge (ASAIC) Roy Dotson as National Pandemic Fraud Recovery Coordinator. He will coordinate multiple ongoing Secret Service investigations, including fraud related to personal protective equipment. The new position will also focus on exploitation of pandemic-related relief, which has drawn the attention of organized crime networks worldwide.
The global reach of the COVID-related crisis has made it difficult for federal law enforcement to stay informed about the growing problem. Because of the ease of finding new victims, federal agencies are struggling to influence consumer decision-making. And the scale of COVID-19 is hardly comparable to that of other natural disasters. Fraud recovery experts must be on top of the situation and be aware of any nuances that may impact their business.
The victims of fraud tend to be younger and Black than those of the general population. They tend to be employed and have at least a Master's degree. They also are less likely to have a high school education or to be in a lower income bracket. Most fraud invoice scams are employed, living with roommates or in residential facilities. The age of the victim is another risk factor. Further, he is likely to be employed and living with family, rather than in a nursing home-like facility.
During the COVID-19 pandemic, consumers were targeted by fraudsters who took advantage of the lack of information available on the virus and the spread of disinformation online. Federal officials warned consumers about COVID-19 frauds in late March 2020 and found counterfeit testing kits at airports in Chicago and Los Angeles. They say that the frauds are costing consumers $77 million. The U.S. government is giving crisis relief funds to a larger group than ever before, but it's not clear what the true causes of this epidemic are.
In a time of health care crisis, people are more likely to make impulsive decisions, lacking sufficient information to make a good decision. They are more prone to fraud because they lack self-control and often do not pay attention to government warnings. In addition, they are less likely to trust official sources of information due to widespread misinformation. In such a climate, the lack of self-control makes people more likely to become a victim of fraud, so government officials can educate the public on COVID-19-related fraud.