Do You Know the National Fraud Center?

Dennis Walters and Don Wadsworth addressed the Philadelphia Area Chapter recently to enlighten us all. As a government and private contractor investigative firm, the National Fraud Center, Inc. provides confidential investigations in order to "keep fraud out of your business," says Don Wadsworth. The National Fraud Center is a wholly owner subsidiary of Lexis-Nexis, the public information database company.

Dennis Walters states that while fraud is pervasive, it is unsure as to the accurate figures but on a global scale fraud occurrences are higher than reported. At least six percent (6%) of loss can be attributed to fraud.

In dollar amounts, that is $1.7 TRILLION lost to fraud. The insurance industry estimates $211 billion is labeled fraud. The financial industry is fighting losses due to check fraud, credit cards/ identity theft, loans, etc of over $181 billion. Corporate fraud losses top $622 billion and government losses are reported at $612 billion.

In discussing the cost of economic crime, implications of identity theft in fraud matters and due diligence solutions, Dennis Walters notes that the motives of increased profit, low cost, mobility, anonymity and repeat business allow for fraud to grow. He states that fraud is both your partner and your competitor. While it victimizes your company and your customers, stealing profits from your service, it hinders your efforts as you compete for market share. Technology is a fraud enabler. Without a standardized encryption system, this is an avenue for fraud. False or stolen identities are easily obtained. Check into the Angelfire web site to become anyone you want to be, or maybe you need phonyid.com for your own FBI hologram identification for $125. Credit and Debit card numbers for American Express, Visa, Master Card, and Discover cards are being stolen in huge blocks. Some 485,000 viable card numbers have been placed on the internet for anyone to use, and not traced back to the original hacker. Citibank has been infiltrated electronically. Ten million dollars was moved to Columbia, Hong Kong and Indonesia. According to Citibank, the loss was only $100,000. Financial institutions are working on a two-way tracking system.

Due Diligence is being challenged. Organizations can be held liable if an employee commits fraud and a due diligence search was not completed. Legislators are considering stricter controls of access to public information. While there are positives and negatives to this it hampers to efficient due diligence search. Also, the Fair Credit Reporting Act imposes restrictions.

Don Wadsworth notes that funds allocated to fraud detection are limited. The fraudsters use sources that limit their personal contact. Once a card number is obtained, the fraudster verifies the accessibility by a small dollar purchase. Once this is accepted, he or she then goes to the internet and runs the account to the maximum.