Companies lose an estimated 5% of their revenue each year due to fraud, according to a
The report found a total of $3.1 billion was lost to fraud based on 1,921 actual fraud cases from 138 countries and territories that were investigated by certified fraud examiners between January 2022 and September 2023. The average loss per case was $1.7 million.
Financial statement frauds are the least common, but the most costly, according to the report, making up 5% of the cases in the study, averaging $766,000 in median losses. On the other hand, asset misappropriation schemes are the most common but the least costly, accounting for 89% of the cases studied, and $120 in median losses. Nearly half the cases (48%) involved corruption.
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Many of the cases investigated during that period had fraud associated with pandemic-related programs. In the ACFE’s 2024 report, 53% of the cases had at least one pandemic-related factor that contributed to the fraud’s occurrence, and median losses from frauds increased for the first time since the 2016 report. On the other hand, fraud cases involving more than one perpetrator decreased, reversing the trend of increasing collusion from previous years.
In the U.S. fraudsters took advantage of fraud-prone government programs such as the Paycheck Protection Program, the Employee Retention Tax Credit, and the COVID-19 Economic Injury Disaster Loans. Last year, the Pandemic Response Accountability Committee, a government funded watchdog group,
“Pandemic lockdowns prevented fraudsters being able to work together to commit frauds,” said ACFE president John Gill in a statement Wednesday. “However, the economic pressures of the pandemic, combined with the opportunity of remote work and emptier offices, kept the frauds going.”
The median loss per fraud case in government organizations amounted to $150,000, according to the ACFE report, with corruption more likely to occur at the national level of government.
While only 4% of the cases in the study involved cryptocurrency, that percentage is expected to grow in the future. Nearly half (47%) of the cases studied involved the conversion of stolen assets into cryptocurrency, while 33% involved bribery or kickback payments made to a co-conspirator in cryptocurrency.
On a regional level, the Latin America and Caribbean region had the highest median loss per case, at $250,000. The Asia-Pacific region and Eastern Europe and Western/Central Asia region tied for second place with a median loss of $200,000 per case. The regions with the highest percentage of cases involving corruption were Southern Asia (74%) and Eastern Europe and Western/Central Asia (71%).
A typical fraud case lasted approximately a year before it was detected. More than half of the 43% of frauds that were detected by tips came from employees.
Fraud perpetrators were more likely to be male in 74% of the cases studied, and between the ages of 31 and 50 years old in 69% of the cases studied. Most perpetrators (87%) had never been charged or convicted for fraud-related offenses in the past.
The vast majority (84%) of fraudsters exhibited at least one behavioral red flag before they were caught, with the most common being that they were living beyond their means (39%). Nearly two-third (68%) of perpetrators in the study were terminated by their employers, and nearly three-quarters (72%) of fraud cases referred to law enforcement resulted in a conviction.
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