Fraud Rate Research Articles

Ad Fraud Under the Vertical Contract Structure

Ad fraud has serious consequences for brands. However, only limited theoretical works have addressed this topic, and empirical research is scarce. In this paper, we examine ad fraud behavior at different levels of vertical contractual structure. Using two unique data sets separately containing click fraud information for agents and publishers, we examine the difference in ad fraud scale and strategy between upstream agents and downstream publishers. The findings reveal that upstream agents are more sophisticated players than downstream publishers when committing ad fraud. Agents’ ad fraud rate shows decreasing effects on the size of the campaign, while publishers’ fraud rate is uncorrelated with their ability to attract authentic traffic. In terms of strategy, while publishers adopt a relatively uniform strategy and seem to be myopic, agents are more sophisticated and show clear patterns of forward-looking behavior. We speculate that different market environments and incentives drive these differences.

Forensic Account in Public Finance Management

The growing spate of corruption, fraud and financial crimes with devastating consequences on companies and national economies has compelled regulatory changes across national, regional and even international boundaries. In fact, the general perception was that such vices were largely an internal event, primarily impacting the organization's net earnings or earnings per share (EPS). They were not conceived to have a major impact in the way businesses were conducted. Unfortunately, that perception has considerably changed in recent times. Today, the world understands better with organizations knowing that the negative effect of these offences goes beyond the bottom line of any organisation. Basically, these vices serve to attenuate optimum pursuit of organizational goals; they limit organizational ability to economize on scarce resources, including information processing and decision-making capability, in transaction cost terms; they promote information hoarding, opportunism, bounded rationality and distortions. The associated negative publicity of corporate fraud breeds high reputational risks, stifles business prospects, and threatens business survival. These are the core transactional issues on which a comparative assessment of the rise of fraud examination and forensic accounting in Africa turns. Corruption is rife in state-owned enterprises (SOEs) and government agencies which have become a conduit by Government officials, legislators and politicians to divert funds through inflated contracts, bloated staff strength, and overpriced procurement of goods and services. The fraudulent monies would then be laundered into the financial system through concealed deposits in private pseudonym accounts, ‘non-existent corporate’ accounts, purchase of real estate, or donations to political parties, religious bodies and charities involved in the scheme. (Herbert, Tsegba, Ene and Onyilo 2017:2) Nowadays, the audacity of corruption is not just an act of the mind but a deliberate one perpetrated with total disregard for the law and its consequences. As fraudsters have become more dangerously creative with devastating consequences, so has the configuration of fraud investigation become increasingly sophisticated with encouraging results. Forensic accounting, which has evolved to combat the growing rate and economic consequences of fraud and abuse, financial crimes and corruption, encapsulates specialized knowledge and specific skills to stumble up on the evidence of economic transactions. (Joshi, 2003). Traditional accountants, however effective they may be, are not necessarily forensic accountants. The global economic consequences of recent accounting scandals juxtaposing the increasing spate of fraud and corruption have occasioned new national and international antifraud and anti-money laundering legislations. These have created a huge demand for fraud investigation and forensic accounting work. Increasingly, many professional accountancy firms are establishing specialized fraud examination and forensic accounting units to keep up with the workload. At the same time, organizations and government agencies are finding it difficult to recruit experienced and highly skilled forensic accountants and fraud examiners. (Herbert et al. 2017:5) This last point will be developed in the next paragraph. This paper is addressing the need for forensic accountants with the public finance management reforms. The need and the definition of forensic accounting will be developed. The public financial management is discussed along with various actions for an effective implementation.

KORUPSI, PERTUMBUHAN EKONOMI DAN KEMISKINAN DI INDONESIA

Some countries have been faced to corruption stage. Especially developing region, corruption has became a disaster humankind and occur a global issue, because it is very disturbing cycle of the world economy. In many cases corruption related to financial report manipulation. One of the factor fraud rate is accounting have leave religion aspect in their report. A revolution of solution must be born in the globe. to reduces and combating the level of corruption, but on the other hand accounting makes corruption becomes more fertile. This research uses the literature approach and is expected to be one of the concepts for future research in conducting research on the prevention of corruption for accounting sector. Based on literature study we found that the approach to culture and religiosity in Indonesia will be more effective in preventing corruption. This is caused by the people of Indonesia, which consists of many tribes, cultures, beliefs and religions.

DNA barcoding for the verification of supplier's compliance in the seafood chain: How the lab can support companies in ensuring traceability.

Food Business Operators (FBOs) rely on laboratory analysis to ensure seafood traceability. DNA barcoding and Forensically Informative Nucleotide Sequencing may represent a support within self-checking programs finalized to suppliers’ qualification and products identity certification. The present study aimed at verifying the usefulness of a decisional procedure (decision tree) set up at the FishLab (Department of Veterinary Sciences, University of Pisa, Italy) for seafood species identification by DNA analysis, to cope with FBOs’ needs. The decision tree was applied to the analysis of 182 seafood (fish and molluscs) products, conferred to the FishLab by different FBOs between 2014 and 2015 as result of their self-checking activities. The analysis relied on a standard COI gene fragment eventually integrated by the analysis of alternative or supportive molecular targets (cytb and 16S rRNA). It also included a mini-DNA barcoding approach for processed products. Overall, 96.2% of the samples were unambiguously identified at species level using the elective target alone (92.4%) or a multi-target approach (3.8%). The lack of species identification (3.8%) was attributable to the absence of reference sequences or to the low resolution of the molecular targets. Nonetheless, all the molecular results were deemed adequate to evaluate the sample’s compliance to the label information. Non-compliances were highlighted in 18.1% of the products. The protocol was proven as an effective supportive tool for the seafood identity verification within the supply chain self-checking activities. In addition, a considerable fraud rate was confirmed and the species most frequently involved in substitution were pointed out.

Information collection for fraud detection in P2P financial market

Fintech companies have been facing challenges from fraudulent behavior for a long time. Fraud rate in Chinese P2P financial market could go as high as 10%. It is crucial to collect sufficient information of the user as input to the anti-fraud process. Data collection framework for Fintech companies are different from conventional internet firms. With individual-based crawling request, we need to deal with new challenges negligible elsewhere. In this paper, we give an outline of how we collect data from the web to facilitate our anti-fraud process. We also overview the challenges and solutions to our problems. Our team at HC Financial Service Group is one of the few companies that are capable of developing full-fledged crawlers on our own.

A National Identity Management Strategy to Enhance the Brazilian Electronic Government

Amongst the several problems with the Brazilian e-government services (e-Gov), many of them are related to the fact that Brazil does not have a National Strategy for Digital Identity Management (IdM). To design a national strategy, it is crucial to analyze the solutions adopted in other countries and take into account Brazilian characteristics, such as its area, population, digital inclusion index, socio-political and economic profile, the current national identity registration system and the fraud rate. In this context, this paper aims to propose a national strategy for IdM for the Brazilian e-Gov program. This strategy was built upon by a literature review of the experiences of European countries and, mainly, the peculiarities inherent to Brazil.

Illuminating a Dark Side of the American Dream: Assessing the Prevalence and Predictors of Mortgage Fraud across U.S. Counties

Using novel county-level data, the authors document that nearly 25% of residential mortgage loans originated between 2003 and 2005 in America contained one or more indications of mortgage fraud but also that rates were highly variable across counties. Multivariate regression models reveal that rates of mortgage fraud were higher in areas with greater loan volumes, a larger share of loans originated by independent mortgage companies, elevated rates of preexisting property crime, and higher levels of black-white racial segregation; it was less prevalent where government-sponsored enterprises purchased a larger share of the loans sold in secondary mortgage markets. The findings are most consistent with classic and contemporary anomie theories and perspectives that highlight the geographic targeting of selected housing markets with loan products and tactics that provided fertile ground for mortgage fraud. The authors discuss the implications of these patterns for developing a more comprehensive understanding ...

RUMUSAN PENGATURAN CREDIT CARD FRAUD DALAM HUKUM PIDANA INDONESIA DITINJAU DARI ASAS LEGALITAS

Internet is an information technology development product. Internet provide so many benefits for society in various field of life. One of its benefit is electronic payment system in e-commerce system. That benefits are also used by irresponsible persons for te crimes. One form ofcrimes in these field was credit card fraud. Based on data, Indonesia is a country with te highest rate of credit card fraud around the world. This is caused by the weakness of legal substance that regulate such crime. The Purpose of this research is to looking for such weakness based on principles of legality point of view. For such purpose, researcher use normative juridical of research methods with the konseptual and statute approach.

Fathers as Frauds: On the Criminalization of Fathers in the Parental Leave for Fathers Program in Israel

The criminalization of poverty, the process in which recipients of social security benefits are construed as frauds, is a well-documented phenomenon. Two aspects of this process are the use of stereotypes as a tool in fraud accusations and the targeting of marginalized populations. In this article, I wish to expand the gendered discussion of this phenomenon to men by examining the process of the construction of Israeli fathers wishing to take parental leave as welfare frauds. I will claim that this process is based on gendered assumptions that deny the possibility of fathers wishing to care for their children. The program that allows fathers to share parental leave experiences a high reported rate of fraud by fathers claiming parental leave benefits. However, analysis shows that the evidence does not support these reports and that claims on fraud and abuse are the result of a tendentious interpretation of the data by bureaucrats. This tendentiousness is based, I argue, on implicit assumptions about the nature of men. As this case shows, criminalization of benefit recipients can be targeted at nonmarginalized or even privileged groups. This sheds new light both on the criminalization process and on the workings of the gendered power structure.

Identification of the Geographic Origin of Parmigiano Reggiano (P.D.O.) Cheeses Deploying Non-Targeted Mass Spectrometry and Chemometrics.

Parmigiano Reggiano is an Italian product with a protected designation of origin (P.D.O.). It is an aged hard cheese made from raw milk. P.D.O. products are protected by European regulations. Approximately 3 million wheels are produced each year, and the product attracts a relevant premium price due to its quality and all around the world well known typicity. Due to the high demand that exceeds the production, several fraudulent products can be found on the market. The rate of fraud is estimated between 20% and 40%, the latter predominantly in the grated form. We have developed a non-target method based on Liquid Chomatography-High Resolution Mass Spectrometry (LC-HRMS) that allows the discrimination of Parmigiano Reggiano from non-authentic products with milk from different geographical origins or products, where other aspects of the production process do not comply with the rules laid down in the production specifications for Parmeggiano Reggiano. Based on a database created with authentic samples provided by the Consortium of Parmigiano Reggiano Cheese, a reliable classification model was built. The overall classification capabilities of this non-targeted method was verified on 32 grated cheese samples. The classification was 87.5% accurate.

Findings from a Pilot Study to Measure Financial Fraud in the United States

Consumer financial fraud is a serious problem in our society. While researchers estimate that billions of dollars are lost to scams each year, measuring the true prevalence rate and costs of financial fraud has been hindered by a number of challenges. The FINRA Investor Education Foundation and the Stanford Center on Longevity — working in collaboration with the U.S. Department of Justice — embarked on a project to create, test and refine a survey instrument to measure the scope of the problem. This study reports the results of the pilot test for this new survey instrument.

A survey of machine-learning and nature-inspired based credit card fraud detection techniques

Credit card is one of the popular modes of payment for electronic transactions in many developed and developing countries. Invention of credit cards has made online transactions seamless, easier, comfortable and convenient. However, it has also provided new fraud opportunities for criminals, and in turn, increased fraud rate. The global impact of credit card fraud is alarming, millions of US dollars have been lost by many companies and individuals. Furthermore, cybercriminals are innovating sophisticated techniques on a regular basis, hence, there is an urgent task to develop improved and dynamic techniques capable of adapting to rapidly evolving fraudulent patterns. Achieving this task is very challenging, primarily due to the dynamic nature of fraud and also due to lack of dataset for researchers. This paper presents a review of improved credit card fraud detection techniques. Precisely, this paper focused on recent Machine Learning based and Nature Inspired based credit card fraud detection techniques proposed in literature. This paper provides a picture of recent trend in credit card fraud detection. Moreover, this review outlines some limitations and contributions of existing credit card fraud detection techniques, it also provides necessary background information for researchers in this domain. Additionally, this review serves as a guide and stepping stone for financial institutions and individuals seeking for new and effective credit card fraud detection techniques.

Reducing card-not-present fraud using pre-approved transactions

In this paper, a remarkably simple method to reduce Internet card fraud will be presented, making ‘OFF’ the default for any payment card. First, an in-depth global overview of card fraud figures will be presented based on various sources. Global card fraud is expected to exceed US$35.54 billion annually by 2020. It turns out that most of the countries with mature card markets (defined as countries with high volumes and values of card transactions per inhabitant) experienced high rates of fraud. Card-not-present (CNP) fraud is typically the most common type of fraud experienced. In the next section, the authors explore the reasons why consumers are vulnerable to CNP fraud. Vulnerabilities like phishing attacks, Trojan software, and the man-in-the-browser attack are being discussed, as well as some data breaches. In Europe, legislators are developing regulation addressing the security of Internet payments and this is discussed in a separate section. The new requirements stipulate that the initiation of Internet payments, as well as access to sensitive payment data, should be protected by strong customer authentication. Strong customer authentication is currently widespread, mostly implemented in such a way that users need a special card reader, their smart card, and the use of a lengthy challenge/response procedure. However, in this paper another secure authorisation method is introduced where all payments are blocked by default and users require a dedicated smartphone app to unblock their account for a limited time, thus providing pre-approval for a single payment. The authors argue that the second method offers a superior trade-off for consumers in terms of convenience, integrity, and security. The authors also argue that there is a rationale to explain that the proposed solution, if deployed correctly, can reduce card-related fraud significantly, both for card-present and CNP transactions, and hence is in line with the EU regulator’s ambitions to reduce fraud on Internet payments with cards.

Chargebacks: Another Payment Card Acceptance Cost for Merchants

Although chargebacks are perceived as one of the major cost components for merchants to accept card payments, little research has been conducted on them. To fill that gap, this paper describes the current chargeback landscape by generating detailed statistics on chargebacks for signature-based transactions. Our data are from merchant processors, which, altogether, processed more than 20 percent of all signature-based transactions in the United States. For Visa and MasterCard transactions, chargebacks merchants receive are, on average, 1.6 basis points (bps) of sales number and 6.5 bps of sales value. About 70 to 80 percent of chargebacks are resolved as merchant liability. The most common chargeback reason is fraud, which accounts for about 50 percent of the total chargebacks. The merchant fraud loss rate is 0.7 bps in number and 2.6 bps in value. For American Express and Discover transactions, the total and fraud chargeback rates are somewhat lower. For all of the four networks, the total and fraud chargeback rates are significantly higher for card-not-present transactions than for card-present transactions. They also vary by merchant category. Our fraud results are generally consistent with other available fraud statistics.

Corporate Ethics: Shell Game (A Case Study on Amway)

Ethics are moral guidelines which govern good behaviour. So behaving ethically is doing what is morally right. Behaving ethically in business is widely regarded as good business practice. An ethical decision is one that is both legal and meets the shared ethical standards of the community. In our daily life we come across many of such scams, scandals and corporate frauds which is lowering the dignity of such ethics. The case study tries to investigate the pros and cons of Amway and to make an understanding of its business orientation in Indian context. There have been several complaints against this fraudulent company of indulging in money circulation scheme in the name of selling products. Who has been offering a ‘good business opportunity‘ to become rich in easy ways. In effect, the business of Amway India has been completely shut down for the time being in the Arabian coastal cash-rich State of India – Kerala. The corporate sector in India faces the highest threat with 42% of the companies experiencing fraud as compared to the global rate of 27%. Increase in fraud rates is a major concern among companies. Often, companies in India also have to become victims of swindling practices like suppliers’ kickback, corruption and bribery; as there is lesser judicial activism in addition to more political involvement in almost every sphere. The woes of the system are that even the public and the victims/consumers are ignorant about these frauds and do not want to take any sort of action for the same. That is the reason these frauds are growing like a forest fire which needs to be stopped to bring back the incorporation of ethical traits in corporate business.

Algorithm for Vascular Access in our Imaging Department

Measuring the ability of detection models to predict abnormal or fraudulent events is an important feature of any framework for assessing financial crime, and the Gini coefficient is one of the most common metrics used for assessing the accuracy of a classification model. Traditionally used in inequality studies and credit risk modeling, the Gini coefficient has very powerful features that can be applied to assess the discriminative power of fraud-detection models. Compared to other applications financial crime data set are limited in terms of fraud, which creates many issues around the relevance of performance metrics. The computation of confidence intervals has become a crucial step especially for models built with limited data.Resampling approaches were the first techniques used to compute variance for the Gini coefficient. Some authors have shown that the estimation of Gini’s coefficient can be obtained from ordinary linear regression (OLS) based on the data and its ranks, thereby also providing an exact analytic standard error. These techniques can be developed for assessing the quality of fraud detection models and for measuring the confidence interval of the Gini coefficient. Special attention needs to be given to low fraud rate and/or small length data sets and low-quality models. A new sampling-based method (F-Gini) is proposed for measuring the standard error of the Gini coefficient more adapted to these situations.

Psychological and Functional Vulnerability Predicts Fraud Cases in Older Adults: Results of a Longitudinal Study

ABSTRACTUsing cross sectional data Psychological vulnerability was identified as a correlate of older adults being defrauded. We extend that research by examining fraud prevalence using longitudinal data from the Health and Retirement Study, and to identify the best predictors of fraud longitudinally across a 4-year time frame. Whereas reported fraud prevalence was 5.0% in a 5-year look-back period in 2008, it increased to 6.1% in 2012. The rate of new-incident fraud across only a 4-year look-back was 4.3%. Being younger-old, having a higher level of education, and having more depression significantly predicted the new cases of fraud reported in 2012. Psychological vulnerability was a potent longitudinal predictor of fraud, with the most vulnerable individuals being more than twice as likely to be defrauded. Results indicate that fraud victimization among older adults is rising, and that vulnerability variables, along with some demographic variables, predict new cases of fraud.

The Zero-Inflated Cure Rate Regression Model: Applications to Fraud Detection in Bank Loan Portfolios

In this paper, we introduce a methodology based on zero-inflated long-term survival data in order to deal with fraud rate estimation in bank loan portfolios. Our approach enables us to accommodate three different types of loan borrowers, i.e., fraudsters, those who are susceptible to default and finally, those who are not susceptible to default. Regarding to the survival analysis framework, an advantage of our approach is to accommodate zero-inflated times, which is not possible in the standard cure rate model introduced by Berkson & Gage. To illustrate the proposed method, a real dataset of loan survival times is fitted by the zero-inflated Weibull cure rate model. The parameter estimation is reached by maximum likelihood estimation procedure and Monte Carlo simulations are carried out to check its finite sample performance.

Broken People, Deep Scars, Fractured Communities, Fear and Distrust: Affinity Fraud and the Church of Jesus Christ of Latter-Day Saints

Recently, the number of affinity fraud schemes perpetrated on members of The Church of Jesus Christ of Latter-day Saints has risen with Utah having one of the highest rates of affinity fraud in the United States. Affinity fraud poses significant harm to members of The Church of Jesus Christ of Latter-day Saints and the Church should take a more active role in educating its membership. This article hopes to break new ground by examining the unique social and legal problems of affinity fraud against members of The Church of Jesus Christ of Latter-day Saints and provide recommendations for Church leaders to combat this problem. Typically, responses to affinity fraud have been legislative, passive education, or active education. I argue that, although a legislative response or passive education response may deter some would be fraudsters, a stronger response — and what I assert as necessary — would be an active education response by The Church of Jesus Christ of Latter-day Saints that included increased discussion, training, and educational materials in an effort to better warn and teach members of the Church regarding the dangers of affinity fraud.

Determinants of Internal and External Corporate Governance Predictors of Operational Risk of Fraud of China's State Owned Enterprises

This paper attempts to estimate the impact of four factors on corporate fraud rate using panel data of China's State Owned Enterprises. The sample period is 2010-2012. We extract company information from annual reports of 60 State Owned Enterprises. We found strong evidence that independence of board members is negatively correlated to the number of fraudulent cases. The other three variables -Relation Base, Executive Board and Educational level- are positively correlated.