Press Release

Think Pandemic-Related Fraud Is Going Away? Think Again.

Sep 08, 2021

With the widespread distribution of COVID vaccines now promising hope for a “return to normal,” business leaders need to understand that some of the changes in the business landscape are not temporary — and these changes will have a big impact on their organizations’ fraud risk.

The COVID-19 pandemic has changed the global economy in unfathomable ways since its outset in early 2020. Entire industries were essentially put on pause. Governments provided stimulus money directly to citizens and businesses in amounts never seen before. Companies around the world sent their workforces home and learned to conduct business virtually in ways and at a scale that many of us would have not thought possible just a few months earlier. With the widespread distribution of COVID vaccines now promising hope for a “return to normal,” business leaders need to understand that some of the changes in the business landscape are not temporary — and these changes will have a big impact on their organizations’ fraud risk.

In a new report from the Association of Certified Fraud Examiners (ACFE) and Grant Thornton, 51% of anti-fraud professionals surveyed said that they have uncovered higher levels of fraud since the pandemic began, with 20% saying the increase was significant. While it would be optimistic to believe fraud levels will decrease to pre-pandemic levels as businesses and offices reopen, 71% expect the level of fraud affecting their employers to continue to increase over the next year. One reason we can likely expect more fraud to proliferate is the massive changes in underlying fraud risk factors that have arisen since the onset of the pandemic.  

The two factors that ACFE members said had the most significant impact on fraud risk are shifts in business operations and changes in consumer behavior. While some operations and behaviors may revert to pre-pandemic norms, things like in-office workforces, brick-and-mortar banking and business travel may not ever return to previous levels. With 27% of anti-fraud professionals predicting that pandemic-created changes to business operations and consumer behavior will continue to have a significant impact on fraud risk in the coming year, business leaders need to treat these changes as more than temporary and incorporate them into their risk assessments and anti-fraud plans. A failure to do so could cost your organization significantly.

While the changed business landscape has increased fraud risk for organizations, detecting and investigating fraud have also become more difficult. Common red flags of fraud, like someone living beyond their means, are harder to spot when you can only see one part of a room in their house on a video call. Many organizations have reported receiving fewer tips from employees, which may seem like good news on the surface, but when employees are working remotely, they’re less likely to spot red flags of fraud and report them. Receiving fewer tips does not mean less fraud is occurring. It is far more likely that significant levels of occupational fraud are simply going undetected or unreported. As we return to a normalized control environment, expect to see these frauds begin bubbling to the surface.

Looking toward the future, organizations need to plan on bolstering their anti-fraud resources in response to the likely increase in fraud. Many organizations have cut travel budgets due to restrictions and safety guidelines during the pandemic — with 39% of anti-professionals saying their travel budgets had decreased in 2021 and 21% expecting a decrease for 2022 as well. While it was prudent to limit travel during the pandemic, continuing to reduce travel for audits and investigations will undoubtedly impact your organization’s ability to prevent and detect fraud. Potentially even more shortsighted is the fact that 22% of organizations cut budgets for anti-fraud training for 2021 and 13% plan on decreasing those budgets in 2022. In a time when fraud risk is extremely high, anti-fraud training and education are more important than ever.

Certified Fraud Examiners estimate that organizations lose 5% of their revenue each year to fraud, and after the massive hits that so many industries took in the past year-and-a-half due to the pandemic, business leaders can’t afford to ignore the risks that are still prevalent. Now is the time to reexamine your risks and invest in your anti-fraud resources. We’re not out of the woods yet and won’t be for some time. 

Contact the ACFE
For more information, email PR@ACFE.com.