2020 Report to the Nations: Organizations opting more for civil litigation, internal punishment

According to the ACFE’s 2020 Report to the Nations, organizations are favoring civil litigation and internal punishment over referring their fraud cases to law enforcement. Organizations opting for civil litigation increased to 28% in 2020 from the average of 23% for the past decade. Similarly, referrals to law enforcement have dropped from 69% in 2008 to 59% in 2020.

“We have seen more organizations focusing on internal discipline and civil litigation instead of seeking criminal prosecutions,” said John Warren, J.D., CFE, vice president and general counsel of the ACFE, and one of the co-authors of the report.

When respondents were asked why cases weren’t referred to law enforcement, 46% said the organization felt internal discipline was sufficient — a sentiment that has increased from an average of 33% in the past years. Private settlements as a reason to decline criminal referrals has also increased from 21% to 27%.

The 2020 Report to the Nations, a study of 2,504 cases of occupational fraud investigated by CFEs in 125 countries, also found that a single case of occupational fraud costs a victim organization an average of more than $1.5 million. CFEs estimate that organizations lose 5% of their revenues each year to fraud. The typical fraud lasted 14 months before it was detected and caused a median loss of $8,300 a month.