Crowdfunding – A new cover for Fraud

Crowdfunding is a fantastic way to raise money. However this is not to say it’s not without its inherent risk. As with all other businesses where money is involved, there is always a risk of fraud and crowdfunding is certainly no exception to this rule. For the unaware, crowdfunding is simply a way for a group of people to support a cause, project, or person that otherwise might not have the tools or resources to raise money. It could be supporting a charity event, an author’s book, or a friend’s cancer treatment.
Such websites like Kickstarter, GoFundMe and YouCaring can be easily accessed by anyone anywhere and do not have advanced fraud controls, unfortunately fraudsters have taken note and capitalised on these loophole.

How can you avoid being a victim?

1. Research the creator of the campaign: A good way to begin is to check their social media accounts, Facebook and the likes. Have a look at the activity and the friends for the account. Is there a long history or was the account just recently created? Do the friends appear to be real? Also, can the creator be found on other social media networks?

Other consideration should be whether their name appear in other scams? Are they claiming to do something that seems too difficult as a solo project or is there anything you are unsure of? that could just be good sign for you to steer clear of that campaign.

2. Carry out your own due diligence: Just as your bank won’t issue you a loan without doing a background check, make sure you do the same before donating to any crowdfunding project. Make sure you can verify the truth of the claimed need. Is there any information you can find out about the project creator’s track record? Do you know some scammers are more than willing to fake illnesses and accidents to prey on kindhearted donors?

     While this list is not exhaustive, I would like to re-emphasize on  the importance of conducting your own due diligence as a means of mitigating any occurrences of fraud. It may take three hours, three days but it’s worth it in the end as prevention is definitely always better than seeking restitution after falling victim to a fraud.

Social Media and Identity Theft

Social networking sites have become a great part of people's daily lives, as well as makes the world go round with just the touch of a button, however as I have written in this blog previously, everyone is vulnerable to some form of identity theft and the biggest vulnerabilities comes through the use of Facebook, Twitter, LinkedIn and others.

So, I was glad to find this great article (How Social Media Networks Facilitate Identity Theft and Fraud) written by Kent Lewis via the web. The author lists several best practices for minimising the risk of your personal details being stolen when using social media; here are a few items from his list:

·        Assuming you plan to be active in social media, ensure you minimise the use of personal information on your profiles that may be used for password verification or phishing attacks.

·       Avoid listing the following information publicly: date of birth, hometown, home address, year of high school or college graduation, primary e-mail address.

·       Only send invites people you know or have met, as opposed to friends of friends and strangers.

I encourage you to read the full article at this link; https://www.eonetwork.org/octane-magazine/special-features/social-media-networks-facilitate-identity-theft-fraud

For more information on this topic or any other fraud related area, you are most welcome to get in touch with me via email; contact@emgfraudconsulting.co.uk, I will be happy to assist you

2016 Report to the Nations on Occupational Fraud and Abuse

The Association of Certified Fraud Examiners 2016 report to the nation on occupational fraud and abuse is based on actual fraud cases that occurred in 114 countries across the world.

The report contains important facts for every organisation and business owner.
    
   . Median loss from reported fraud cased amounts to $150,000.

   . Asset misappropriation was the most reported fraud type, which took place in 83% of the cases but has the smallest median loss of $125,000.

   . Financial statement fraud was the culprit in less than 10% of cases but caused the biggest median loss of $975,000.

   . Organisations with fewer than 100 employees were the most likely to suffer from fraud in the study, representing about 30% of
the reported fraud cases. The median loss suffered by those firms was $150,000, the same as those suffered by large organisations (10,000 or more employees) and more than organisations with between 1000 and 10000 employees.

This report also draws an important conclusion on the implementation of of anti -  fraud controls, as organisations seem to be getting the message that anti-fraud controls can limit the duration of and damage caused by fraud schemes.

  

For more information on this report, please visit the ACFE website. 

Thanks for reading

The link between Terrorism & a lack of adequate Financial Crime controls

Financial Crime is a hot topic in today's society. From terrorism financing to fraud to anti - money laundering, it is a massive concern in every jurisdiction across the world.

Terrorist organizations like Al- Qaeda, ISIS, Al -Shabaab and Boko - Haram have become a scourge all over the world. The close to 300 schoolgirls kidnapped by the Boko - Haram group are still unlocated somewhere in the Sambisa forest in Northern Nigeria, the latest massacre of several people in a musical concert in Paris and the attack of a large number of people in the West gate shopping mall in Kenya and several other more recent and deadly attack carried out by this groups.

There has been a multi- country approach to dealing with this issue as various counter – terrorist units have been set up to share intelligence and coordinate military actions, however asfar as preventing the financing of terrorism is concerned, organizations and businesses all over the world must serve as the first line of defense by ensuring they thoroughly identify their customers and verify their identities as these would prevent suspect individuals from infiltering the system in the first place.

Every organization must maintain a robust KYC & AML processes as suspect individuals can easily change their names and obtain new identification papers; suspect corporate entities can often change their identities even more easily; and in any case accounts can be opened and manipulated through front men.

The question now is how long would we continue to witness this attacks, as practical solutions are still not as effective as they should be.

For more information on this topic or any other related subject, you are most welcome to get in touch with me via email; contact@emgfraudconsulting.co.uk   

The New Year focus

To those of you who have been keen followers of my blog and to those who are first-timers, may I seize this moment to welcome you all.

My name is Gbolahan Babalola a Certified Fraud Examiner based in the United Kingdom serving businesses and private clients in the prevention and detection of fraud.

My overall goal in writing here is to offer sound and practical advice for you and your organization on fraud prevention and detection issues.

Fraud is a growing concern for organizations and individuals regardless of age, gender, race or nationality.  I will continue to highlight current and future trends, discuss cases and give practical advice on how to prevent and detect fraudulent activities like Investment scams, Identity theft and Advanced fee fraud.

If your organization, professional body or civic group would like to learn more about any of those areas, I'd be happy to set up a speaking engagement.  Please get in touch with me via email; contact@emgfraudconsulting.co.uk