• Abstract and Figures
• Public Full-text

Fraud typologies and victims of fraud Literature review Fraud typologies and victims of fraud Fraud typologies and victims of fraud Literature review Mark Button, Chris Lewis and Jacki Tapley Centre for Counter Fraud Studies, Institute of Criminal Justice Studies, University of Portsmouth Contents 03 Executive summary 04 Introduction 06 The characteristics of frauds 06 Mass marketing scams 09 Identity frauds 11 Frauds against small businesses 11 Perpetrators of frauds 13 The techniques of fraudsters 19 The characteristics of victims of fraud 19 Victim typologies 21 Profile of victims 23 Low reporting of frauds 25 Impact upon the victim 26 Plural provision 28 What do victims want? 30 Conclusion 31 Glossary 32 References 35 Appendices 35 Appendix 1 36 Appendix 2 03 Fraud typologies and victims of fraud 2 Literature review Executive summary This review profiles a wide range of Significant numbers of people have been the frauds which affect individuals and victim or nearly the victim of fraud. small businesses. In particular, it looks The characteristics of victims, however, do vary. at mass marketing, identity and small Typologies distinguish differences in their business fraud. knowledge of the fraud, the degree of co-operation and in the loss. The review highlights the diversity within fraud including who perpetrates it. The report also The profile of victims also varies. For instance, mass shows the level of innovation and skill involved marketing fraud does not attract one type of victim. in committing fraud, thus coining the word Men, women, the old and the young tend to fall ‘scampreneurs’ to describe these criminals. for different variations within this field of fraud. There are a wide range of techniques used to Another example is identity frauds where research commit frauds, which can be divided into four suggests those 26-45 years old, working in a areas: victim selection techniques, perpetration professional occupation, owner occupiers (usually strategies, detection avoiding strategies and in a detached house), earning over £50,000 (these securing the gains. The latter of which is beyond are 3 times more likely to be victims), and Directors the scope of this review. of companies are most at risk. Victim selection techniques include the use of Identity fraud is generally reported, but mass both open and illicit sources of information to marketing fraud tends to have very low rate of target individuals. Typical sources are publicly reporting, often 1 to 3 per cent. available marketing lists, directories as well as so called ‘suckers’ lists of those who have already There are a wide range of reasons for low reporting fallen for a scam. which include: the victim may not know they have been defrauded, they feel partly responsible, Perpetration strategies vary according to the the embarrassment, the low financial loss, the specific type of fraud but some of the most ambiguity of the fraud, the attitude of statutory common include the use of sound business skills, bodies and confusion, amongst others. the latest technology, promoting professional appearances, utilising ‘good’ sales techniques, There are also major impacts on victims because seeking small sums of money and operating in a of the fraud. These include financial losses, loss of legal hinterland, amongst others. employment, emotional impacts, health problems, disintegration of the family, self blame and There are another wide range of techniques behavioural changes. specific to identity fraud, ranging from stealing waste to secure personal information to the use The provision to support victims of fraud compared of sophisticated software to hack into victims to other crimes is also much more pluralised and computers to steal personal data. confusing for victims. Fraudsters also use a wide range of techniques to There is also research to illustrate some of the avoid detection. They often operate in jurisdictions things victims want, which include: individual case where they are unlikely to be bothered by law workers, been kept up-to-date with progress, a more enforcement. They move locations regularly to sympathetic approach, better training of staff dealing avoid detection as well as operating in a legal with victims, better and clearer information, restitution hinterland and seeking small sums of money. and for the offender to be caught and punished. 05 Fraud typologies and victims of fraud Introduction Fraud encompasses a wide range of Table 1 behaviours that are linked by trickery Levi’s typology of fraud by victim or deceit with the intention it will culminate in some form of gain. Victim sector Victim subsector Examples of fraud Private Financial services Cheque fraud Counterfeit intellectual It can range from ‘internal’ frauds where a property and products previously law abiding employee exploits an sold as genuine opportunity to embezzle monies from his/ Counterfeit money her company to ‘external’ frauds perpetrated by Data-compromise fraud organised criminals on an industrial scale, such Embezzlement as stealing identities to secure loans. The passage Insider dealing/ of the recent Fraud Act 2006 has provided some market abuse clarity to the crime by defining most of the Insurance fraud offences under: Lending fraud Payment card fraud • Fraud by false representation Procurement fraud • Fraud by failing to disclose information Non-financial Cheque fraud • Fraud by abuse of position Counterfeit intellectual property and products What is clear, however, is that fraud embraces a sold as genuine broad scope of different crimes. This is illustrated Counterfeit money further by some of the attempts to produce Data-compromise fraud typologies of the different types of fraud. One of Embezzlement the most comprehensive has been produced by Gaming fraud Levi (2008a: 391) and is presented in Table 1. Lending fraud Payment card fraud The list identified by Levi could be expanded with Procurement fraud further categories and sub-divisions such is the Individuals Charity fraud breadth and diversity of fraud. However, the terms Consumer fraud of reference for this review are clearly focused Counterfeit intellectual property and products upon fraud against individuals and small firms with sold as genuine particular reference to the following four: Counterfeit money • Mass marketing scams Investment fraud • Investment frauds Pension-type fraud • Identity fraud Public National bodies Benefit fraud • Fraud affecting small businesses Embezzlement Procurement fraud Tax fraud Local bodies Embezzlement Frauds on Council taxes Procurement fraud International bodies Procurement fraud (but affecting the (by national against other public) – mainly but not always foreign – companies to obtain foreign contracts) EU funds fraud 06 Literature review Introduction The rest of this review will be dedicated to the growing literature that has been published on each of these frauds within the parameters set by the NFA. It is important to note, however, that compared to many other crimes, fraud is relatively neglected by researchers (Levi, 2008b). The focus of the review is the UK, but acknowledges the breadth of information published in North America and Australia, amongst other countries. There is much that can be learnt from this literature given the sometimes common structural conditions and the increasingly global nature of fraud. However, it is important to bear in mind that the characteristics of fraud in other countries can’t always be applied directly to the UK without changes. This review will begin by examining the range of fraud that falls under the four categories. It will also give a brief overview of the fraudsters themselves and an exploration of the techniques used. In the second part of the review typologies of victims will be outlined, followed by a profile of certain types. The review will also examine why there is such low reporting and the impact of fraud upon the victims. 07 Fraud typologies and victims of fraud The characteristics of frauds The frauds to be considered in Some of those that have been perpetrated which this review are diverse and can be have been identified by OFT – which do not fall differentiated further. This section into the investment category – will now be briefly described. They have been divided into: gambling seeks to do this by drawing upon the scams, money making scams and bogus services literature available. It then moves on and products (later in appendix 2 the extent and to examine the characteristics of the costs of each type of fraud is considered), for ease fraudsters and the techniques used of reference. to carry out the frauds. Gambling scams Mass marketing scams There are a variety of scams where the victim is invited to become involved in lotteries and other There is no commonly accepted single definition gambling orientated schemes. of what is a ‘mass marketing scam’. Such scams – or consumer frauds – generally fall into four categories: 1. Prize draw and sweepstake scams Fraudsters send out letters and emails to potential • Pretending to sell something you do not have, victims telling them they have won a prize or are and taking the money. entitled to a financial reward, but they need to pay • Supplying goods or services which are of lower a small ‘administrative’ fee to secure access to the quality than those paid for, or failing to supply funds. the goods and services sought. 2. Foreign lottery scams • Persuading customers to buy something they These are similar to the above in that victims are do not really want through oppressive marketing told they have won a prize in an overseas lottery techniques. and they need to pay an ‘administration’ fee or tax • Disguising one’s identity in order to perpetrate to receive the monies. Again, these are perpetrated a fraud (Verniero and Herr, 1997, cited in Muscat via mail, e-mail and sometimes the victims are also et al, 2002: 1). asked to contact an ‘agent’ by telephone. The Office of Fair Trading (2006: 12) has attempted 3. Bogus tipsters to produce a definition of mass marketing fraud as, A variety of bogus tipster scams have been identified.

Load more

  40

Copy Link