Facts About Fraud: Fact #4 – Behavioral Red Flags

Posted by Amanda Nieweler

on November 20, 2014

International Fraud Awareness Week – November 16 – 22, 2014 – #fraudhurtsbad

Facts About Fraud

We’re more than half way through International Fraud Awareness Week. So we bring you our fourth fraud fact:

Fraudsters may behave a little differently.

Now that doesn’t mean you need to study your co-worker’s every move and action like some sort of criminal profiler. That’s a little creepy.

That said, most occupational fraudsters may exhibit certain behaviors that could be warning signs of their crimes. The ACFE’s survey reports that in 92% of the cases they reviewed, there was at least one common behavioral red flag that was identified before the fraud was found. Let’s start off with another few graph, care of ACFEs Report to the Nations.

This graph combines the behavior displayed by all perpetrators in the survey. And ‘living beyond means’ comes out on top… champagne taste on a beer income and all that.


infographic bar chart displayed by perpetrators

But check out this next graph, which shows the behavioral traits based on position in the company. Yesterday’s post covered level of position in the organization compared to amount of fraud loss. It seems that our executives and owners are living beyond their means too.


infographic bar chart behavioral red flags based on position

Now I don’t claim to be an expert, but you would think that these folks would be living nicely based on their salaries and positions compared to the rest of us, thank you very much. I’m also no psychologist, but it makes sense that ‘the more you have, the more you want’. Hey this survey makes more and more sense every time I delve into it!

[I found an interesting article about one fraudster – an honest, hard-working, middle class American who found himself traveling down the fraud path. Here’s his story.]

Also to make note of from the survey is that many of these fraudsters had engaged in non-fraud-related workplace misconduct either before or during ‘the fraud’. The most common being bullying or intimidation and poor performance evaluations.

It’s a shame that occupational fraud has to happen at all, but it does. And as we keep reiterating (we’ll keep reiterating it as long as we have to, to get the point across) employee tips are the #1 method of detecting fraud. Why oh why wouldn’t you implement an ethics reporting system? By the way, that’s tomorrow’s post – employee tips and hotlines.

Don’t forget, spread the word #fraudhurtsbad.

eBook: 7 Reasons to Implement a Whistleblower Hotline

Source: http://www.acfe.com/rttn/docs/2014-report-to-nations.pdf