While many of us are familiar with the gravity of fraudulent activity, we don’t always know where fraud begins. Technological developments, socioeconomic factors and innate opportunities transform the fraud landscape on a continual basis. Staying informed and understanding how these trends can impact your industry is the best safeguard to stay ahead of fraudsters. 

What are the 3 conditions for fraud to exist?

Criminologist Donald R. Cressey published a model called the “fraud triangle” which outlined the three factors that must be present for fraud to happen: 

1. Pressure: When there is a motivated offender that needs money.

2. Opportunity: A vulnerable target or somewhere that has limited controls in place. 

3. Rationalization: When the offender can rationalize their activity as a ‘victimless crime’, oftentimes the target is a commercial entity.

What are the benefits of understanding how fraud originates? 

The more you know about a fraud case’s origins, the better you can develop response options. As you learn more about a fraudster, whether it be an individual or an organized fraud ring, increased systemic solutions can be implemented. 

“To spot and stop fraud, it’s important to note that criminals usually follow the same behaviours. If something is working for them, they will keep doing it. A combination of technology and subject matter expertise is needed to identify and respond to this type of fraud risk. Collaboration among all stakeholders is key so we can work together and stay one step ahead of fraudsters,” says Carl Davies, Head of Fraud & Identity, Equifax Canada.

What should we know about fraud rings and how they impact businesses?

Organized fraud rings often operate much like a business does. In the case of fraud and financial crime, they learn about a business's processes and controls to find a weakness that they can target. These rings are known to play the 'waiting game', often building a profile that won't have any fraudulent activity for 12-18 months. That type of behaviour undoubtedly contains patterns, trends, and characteristics that remain consistent. Therefore, a systemic solution should help raise those 'red flags' early on for enhanced due diligence. This type of complex event poses a significant risk to businesses in terms of financial loss and potential undermining of the business process and fraud strategy. 

Are you or your customers interested in learning more about fraud? Check out the Equifax Identity Theft Education.  

We want to help Canadians live their financial best. If you want to learn more about how understanding fraud can help minimize risk and reduce loss due to fraud for your business, please contact your Equifax Account Representative. You can also reach us directly at 1-855-233-9226 and follow us on Twitter and LinkedIn.  

This article is published by Equifax Canada Co.® 2022. All rights reserved. No part of this article may be reproduced, copied or transmitted in any form or by any means, or stored in a retrieval system of any nature, without the prior permission of Equifax Canada Co. This article is for informational purposes only and is not intended to be legal or business  advice.