Fraud, defined as “intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right”, is a global issue causing turmoil in economies, businesses and individuals. Common examples of fraud include bribery, corruption, identity fraud, counterfeit goods, and Ponzi schemes. It is predominantly a grave threat to the financial services industry and the number of victims is rising.
In most cases that involve fraud, dishonest employees target unsuspecting co-workers and managers, or astute third parties use "social engineering" tactics to break through a company's defenses. Because completed fraud schemes are difficult to monitor, it is important that employees at every level have a basic knowledge of how these illegal activities are done and how to identify the warning signs. A robust fraud awareness training is vital to create a culture of compliance.
Why Invest in Fraud Prevention and Awareness Training?
Fraud Prevention and Awareness Training is an additional cost for most organizations. But just how important is this area of compliance and what are the repercussions that come with refussal to comply?
Here are some of the most popular and expensive fraud cases:
This fraud case is still unravelling as of this writing. In a shocking fiasco, the large American bank got caught with millions of fake accounts in an attempt of employees to meet quotas through cross-selling.
In another fraud case, Wells Fargo is under fire for mishandling fraud cases because it automatically closed many of the accounts in question without performing the legally mandated investigation by law enforcement.
Wells Fargo settled with regulators to pay up a hefty fine of $1 billion to be divided by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.
Elizabeth Holmes swore she will change the world of medicine with new technology and enticed investors such as Henry Kissinger and James Mattis and struck a deal to collaborate with retail giant Walgreen's. Holmes made demonstrations using other company's technology while claiming it was the work of Theranos.
The SEC charged Holmes with deceitfully raising more than $700 million for Theranos in outside investments. Holmes got into a settlement and settled to pay a $500,000 fine, turn in 19 million shares of the company, and is barred from being an officer of any public company within the next 10 years.
The Houston-based energy company had a major collapse in 2001 after an attempt at a merger has failed and, became at the time, the largest US bankruptcy. Enron committed fraud by inflating earnings. A huge number of executives were found guilty of countless crimes ranging from obstruction of justice, money laundering, and insider fraud.
Why is eLearning best for Fraud Prevention and Awareness Training?
Here are some compelling reasons why organizations should choose eLearning over traditional classroom training for fraud prevention and awareness training:
- Participants can choose when and where they can take the training. The only limitation is their device’s connectivity or available space for downloading materials.
- The training is self-paced, so learners do not feel that they are being pressured into learning. This allows them to digest the information properly, without thinking about how others are doing.
- Management or learning and development department can easily pull reports from an LMS. Knowing who has completed the training, what areas learners had a difficult time understanding and the current compliance percentage will help the organization make adjustments in the training program.
- eLearning is cost effective. After the course has been built and deployed in the LMS, there will be no additional cost to the organization that is otherwise needed to fund the salaries of the facilitator, securing training rooms, paying for materials, and spending on travel and lodging of learners from remote locations.
Fraud Prevention and Awareness Training Content
A robust Fraud Prevention and Awareness Training should cover the following topics:
Background of Fraud
This module is an introduction to fraud, its definition and statistical data that show how fraud affects business and organizations worldwide. It also covers why fraud is such a serious issue and how much companies lose per year on fraud cases alone.
This module also focuses on the fraudster, his mental model and typical profile. To complete the background, current trends and statistics about detected fraud, as well as actions taken against fraudsters may be added.
Many learners absorb information better if they can put it into context and see how it affects real people or organizations. A study of past fraud cases can be added in the training to make the training more relatable and engaging to participants.
Evaluating Fraud Risks
More advanced fraud courses, like those being ran in financial institutions, should include a module on Evaluating Fraud Risks. This includes the fraud risk management process and the features of a fraud risk program. Detection and prevention of fraud risks will also fall under this module. Other topics can be added to make the training more valuable to managers and decision makers in the organization, such as creating a reporting process, investigation and corrective action, and generic fraud risk factors.
Major Types of Fraud Risk
This module can be customized to include only fraud risks that are present in the organization. These risks are categorized into IT fraud risks, identity fraud and corruption.
IT fraud risks include computer fraud, e-commerce fraud, internet and intranet fraud, and IT security.
Identity fraud includes existing account takeover, new account identity theft, tax identity theft, medical identity theft, criminal and synthetic identity theft.
Corruption includes bribery, embezzlement, and kickbacks.
Actions to Take When Fraud is Suspected
This module ties up the loose ends in a fraud case. It covers how to react when fraud is suspected, and who among the stakeholders need to be informed. It should also discuss how to manage a fraud investigation, such as interviewing witnesses, and communicating the results to the stakeholders, other employees and the public.