Fraud committed by customers tops the list of all crimes experienced (at 35%), up from 29% in 2018, according to PwC's bi-annual survey of business crime.
The Global Economic Crime and Fraud Survey examines more than 5000 responses from 99 countries, reporting on the overall insights from companies who have experienced on average six incidents over the last two years, said PwC.
Businesses report that customer fraud and cybercrime are the most disruptive of all the crimes, PwC pointed out.
Although fraud committed by customers is on the rise, it is also one of the types where dedicated resources, robust processes and technology have proven most effective for prevention, the company noted.
- Globally, all regions experienced customer fraud in the last two years, with the Middle East (47% up from 36%) and North America (41% up from 32%) seeing the biggest increases.
- While nearly half of organisations responded to crime by implementing and enhancing controls — with 60% saying their organisations were better for it, about half of respondents did not conduct an investigation at all, PwC noted.
- Barely one third reported the crime to their board, but of the organisations who did, 53% ended up in a better place, the company added.
The perpetrators: Who's committing the fraud
Fraud hits companies from all angles - the perpetrator could be internal, external or in many instances there is collusion, according to PwC.
- In the last two years, 39% of respondents said external perpetrators were the main source of their economic crime incidents.
- One in five respondents cited vendors/suppliers as the source of their most disruptive external fraud.
- 13% of respondents who experienced fraud in the last two years reported losing more than US$50 million.
- Antitrust, insider trading, tax fraud, money laundering, and bribery and corruption are reported as being the top five costliest frauds in terms of direct losses - sometimes compounded by the significant cost of remediation.
AI, machine learning deployed to fight fraud
While technology is just part of the answer in fighting fraud, the report finds that more than 60% of organisations begin to employ advanced technologies such as AI and machine learning to combat fraud, corruption or other economic crime, survey results indicate.
However, concerns about deploying technology are linked to cost, insufficient expertise and limited resources. 28% say it's because they struggle to see its value, PwC said.
The benefit in using technology to fight fraud is undeniable but organisations must recognise that using tools or technology alone does not amount to an anti-fraud programme, PwC pointed out.
"Collecting the right data is just the first step. How the data is analysed is where companies will have an advantage when fighting fraud,” said Kristin Rivera, PwC Global Forensics Leader. “Companies often fail to see the value in technology when they don't invest in the right skills and expertise to manage it"