NCJ Number
190937
Date Published
March 2001
Length
6 pages
Annotation
Building on an earlier "Trends and Issues" paper, "The Psychology of Fraud" (No. 199), this paper identifies warning signals for fraud and proposes some preventive or pre-emptive action.
Abstract
Four types of fraud were examined: entrepreneurial fraud, which is committed against an organization by a principal or senior official of that organization; client or employee fraud, which is committed against an organization by a client or employee; direct interpersonal fraud, which is committed against one individual by another in the context of direct face-to-face interaction; and indirect mass fraud, which is committed against a number of individuals through print or electronic media, or by other indirect means. The most effective means of combating entrepreneurial fraud is to improve corporate governance. Ideally, a regulatory framework would require maximum feasible transparency in a company's or organization's operations. Fraud by employees may be most effectively prevented by careful recruitment of staff, responsible personnel management to maintain workplace morale, and by the design of systems to reduce opportunities to commit fraud. The most effective bulwark against face-to-face fraud is to educate prospective victims about the risks that they face. Consumer awareness is also paramount in combating indirect fraud. Generally, the challenge in countering fraud is to structure systems that limit the access of the potential fraudster to a target, without unduly impeding legitimate commercial activity. 15 references