Fraud is a large problem across the world. In the US, there were more than 2.8 million reports of fraud from consumers in 2021, with the average loss per incident standing at over $2,000. From cybercrime to simple scams, it’s clear that fraud isn’t going away any time soon, and both businesses and individuals need to be aware of it in order to combat it.
Not only can fraud cost you significant amounts of money – especially if you are a business – but it can also have other impacts. Psychologically, it can be hard to have been a victim and it can cause you to lose your confidence. Businesses can lose out on traffic and revenue as customers see them as less reliable due to having fallen victim to a scam.
All this is why it’s so important to be aware of fraud and how to prevent it. Here are some of the ways fraud can affect you, whether you are a business or a consumer, as well as some of the methods you can use to prevent it.
Fraud is a common issue for businesses, but it doesn’t always impact them how you might expect. Financial crime is common and is the most frequent result of fraud against companies. However, there are other ways it can affect you, such as the impact on reputation mentioned above.
According to a study from PwC, while 53 percent of fraud cases resulted in financial losses for businesses, this was not the only effect. Over a third of businesses realised they needed new technology as a result of fraud, which is not only another cost but also a drain on time and other company resources due to needing to find the right supplier.
Almost a quarter of businesses lost new business opportunities as a result of fraud, and a similar amount found they had suffered a hit to employee morale. These might not seem as important as the immediate financial impact. However, they can last for much longer and have a significant effect on how your business runs, so they should not be ignored.
Knowing which types of fraud, you are vulnerable to is a great first step. However, there are other actions you can take to keep yourself safe. Many of these are as simple as being careful about the data you share online, but there are other things to bear in mind.
For example, check fraud is still very common, with scammers using forged business checks to pay for goods and services. Upgrading to checks with forgery prevention measures can go a long way towards making sure your company’s finances are safe from scammers.
While fraud can be scary, keeping yourself informed is a great way to prevent yourself from falling victim to the crime. Keep in mind the various risks there are, and you will be able to recognise when you are in a vulnerable situation, potentially preventing yourself from losing money.
Consumers can be affected by fraud as well, of course. While businesses often offer greater rewards to scammers, there is still plenty of money to be illicitly made by defrauding individuals. For example, one of the most prevalent forms of fraud in the US is identity theft, where a scammer uses fake or stolen credentials to pretend to be somebody else.
This can be devastating, with the cost to Americans in 2022 being around $5.8 billion. The number of people affected by this is growing rapidly, from 2.93 million in 2017 up to 5.74 million in 2021. This is possibly due to the increase in people storing their details online. However, it’s not the only thing to be aware of when it comes to fraud.
Credit card fraud also affects over 35,000 Americans a year, with individuals finding their cards have been cloned or their account details have been stolen. Luckily, many banks are now taking active steps to freeze accounts if there is any suspicious activity, which helps to limit the amount you can lose due to fraud.