Fraud Rate Research Articles

General Purpose Reloadable Prepaid Cards: Penetration, Use, Fees, and Fraud Risks

Prepaid cards are the most rapidly growing payment instrument. General purpose reloadable (GPR) prepaid cards, in particular, have gained considerable traction especially among the unbanked and underbanked. How these cards are used is now of acute interest to both policymakers, seeking to ensure broad access to electronic payment methods, consumer protection for prepaid cards, and payments system security, and to payment card industry participants, desiring to advance their product offerings and business models. This study examines the end-user experience of using a GPR card. It investigates which factors, if any, affect the intensity and duration of GPR card use, estimates the fee burden associated with various card usage patterns, and calculates fraud rates by transaction and merchant type. Because we lack cardholder information other than zip code, we supplement our card data with local demographic and socioeconomic data to test whether these factors are correlated with the observed variation in card use and incurred fees. Our results suggest that both account and local socio-demographic characteristics significantly influence the life span, the load and debit activities, the shares of purchase and cash withdrawals, and the average number and value of fees incurred per month, and that transaction and merchant types influence the rate of fraudulent transactions.

Effects of Automated Teller Machine on the Performance of Nigerian Banks

This study investigates the effects of ATM on the performance of Nigerian banks. Available studies have concentrated on the significant dimensions of ATM (automated teller machine) service quality and its effect on customer satisfaction with a bias against ATM producers. The study is motivated by the astronomical challenges confronting the proliferation of ATM infrastructure and attendant financial losss to banks which are often under-reported. Also, there are serious debate on the relevance of ATM technology as most countries in the world are moving away from the virus technology to the more secured chip cards free of credit and debit frauds. Questionnaire was used to collect the data from a convenience sample of 125 employees of five selected banks in Lagos State with interswitch network. Therefore, data collected through the questionnaire were analyzed statistically by using the Software Package for Social Science (SPSS Version 20.0 for Student Version) and chi-square technique. The results indicate that less than the benefits, the deployment of ATMs terminals have averagely improved the performance of Nigerian banks because of the alarming rate of ATM fraud. Similarly, ATM service quality is less correlated to security and privacy of users and providers.The conclusion therefore is that banks should strive to increase their security layers to subvert the tricks of web scammers, limit the amount which customers may be allowed to withdraw at a time and provide electronic alerts to customers’phone for all transactions carried out on their bank accounts through ATMs and the provisions of extra security layer that can prevent third party to make use someone else’s ATM card for unauthorized withdrawals electronically.

CDBG Disaster Recovery Assistance and Homeowners' Rebuilding Outcomes Following Hurricanes Katrina and Rita

The Community Development Block Grant (CDBG) program has played an important role in the federal government's response to natural disasters, providing a tool for delivering disaster recovery assistance to affected states and localities. This article provides an overview of the CDBG program's role in disaster recovery. It then examines the use of CDBG funding to support housing recovery in Louisiana and Mississippi following Hurricanes Katrina and Rita. We use FEMA damage assessments, state administrative program data, and on-site observation of properties' rebuilding outcomes to examine the coverage and sufficiency of CDBG grants as well as the rebuilding outcomes of grant recipients' properties. We find that a substantial share of CDBG recipients faced rebuilding or repair costs that exceeded their total funds from insurance, CDBG grants, and other sources. We also find that reception of a CDBG grant does not guarantee that a homeowner's property is rebuilt. Depending on the program option, anywhere from 7% to 48% of grant recipients who opted to rebuild had not done so as of early 2010. Finally, the results provide limited support for concerns about the use of compensation grants to provide CDBG assistance. Homeowners' responses to a telephone survey indicate that some grant recipients used CDBG funds for purposes other than rebuilding and that the use of compensation grants may have exposed homeowners to higher rates of contractor fraud. The article discusses the implications of these findings for the future use of the CDBG program for disaster recovery.

ANALISIS DAMPAK KEBIJAKAN PENERIMAAN PESERTA DIDIK SEKOLAH MENENGAH PERTAMA 3 SEMARANG ( KAJIAN PERATURAN KEPALA DINAS PENDIDIKAN KOTA SEMARANG 420/3271 TENTANG PETUNJUK TEKNIS PENERIMAAN PESERTA DIDIK REGULER DI KOTA SEMARANG 2010/2011 )

The problem admission process in SMP 3 Semarang was always about the achievement scores of the prospective students that applied to SMP 3 Semarang. This problem is getting worst and more complex by years, so SMP 3 Semarang is trying to prevent it by making a policy that oblige all prospective students that want to apply to SMP 3 Semarang by using the achievement scores to undergo the achievement scores test done by the school admission committee and oblige to sign a stamped statement that acknowledge the truth of their achievement scores as well. This research aims to identify and analyze the policy impact of school admission policy made by SMP 3 Semarang and to find out all the supporting and impeding aspects during the policy implementation/practice. The research uses descriptive qualitative. In conclusion The research showed that this policy that have been made by SMP 3 Semarang have both internal and external effects, in the form of positive responds giving by public and the Education Board itself already fully support as well the policy that oblige all prospective students that want to apply by using the achievement scores must undergo the achievement scores test done by the school admission committee and oblige to sign a stamped statement that acknowledge the truth of their achievement scores. This policy is having effect on SMP 3 Semarang as well in the form of the descent rate of fraud in the school admission process in SMP 3 Semarang, so the school quality is maintained

Pretense of parentage by siblings in immigration: Polesky's paradox reconsidered

Older and younger siblings occasionally attempt to impersonate parent and child to expedite immigration under US family-based visa policies. The rate with which full siblings escape detection by current relationship tests is unknown. Retrospective study of full-sibling immigrant pairs was undertaken to determine the proportion that show insufficient genetic evidence to exclude parentage. Sibship and parentage indices (SI and PI) were compared/case in unexcluded sibling cases and true parent-child cases. Alleles shared per short-tandem-repeat locus were compared in sibling and parent-child pairs. The proportion of successful parentage fraud by siblings was estimated from the parentage exclusion rate among immigrants and the proportion of sibships without genetic inconsistencies (GIs). When 11 to 25 independent loci were tested per two-sibling case to verify or refute parentage, tests failed to demonstrate any GI in 9% and PI was greater than SI in seven of 10 of these cases. Another 29% of full-sibling pairs demonstrated insufficient evidence (fewer than two GIs) to exclude parentage. Thus, 0.4% of sibling pairs could falsely claim a parent-child relationship and show no GIs. Another 1.4% could make that false claim and not present sufficient evidence to be excluded. At present, with no evidence of parentage exclusion in a full-sibling pair, the relative magnitudes of PI and SI are misleading relationship indicators because too few loci are examined and rates of sharing one and two alleles/locus vary greatly in parentage and sibling pairs. Only evidence of exclusion ascertains false parentage claims by siblings. Nevertheless, the expected rate of successful fraud is quite low.

PENGARUH AUDIT TENURE TERHADAP FRAUDULENT FINANCIAL REPORTING DENGAN PENDEKATAN AKRUAL DISKRESIONER

The purpose of this research was to describe audit tenure, fraudulent fianncial repoting, and the effect audit tenure on fraudulent fianncial reporting with discretionary accrual approach. This research used 83 samples of companies listed in Indonesia Stock Exchange period 2009-2010. Samples was collected by used puposive sample method. The hypothesis tested by simple linear regression analysis. The results of this study indicate that audit tenure for three consecutive years (2009-2011) there were 16 companies that have changed auditors every year, 36 companies that perform audit engagements with the same auditor for 2 years, and 31 companies that perform audit engagements with the same auditor for 3 years.While, the results of descriptive analysis showed that the fraudulent financial reporting has a minimum value is -0.7940, maximum values is 0.3670, and an average of fraudulent financial reporting at 83 companies listed in the Indonesia Stock Exchange is -0.010622. Financial reporting fraud rate indicates a value of less than zero (-0.010622), which indicates that there are indications of fraud in the form of earnings management with minimazation income, which lowers the level of income reported earnings. The results of hypothesis showed that the audit tenure has no effect on fraudulent financial reporting.

What factors drive personal loan fraud? Evidence from Germany

Based on a data set of nearly 43,000 personal loan applications from Germany, this paper empirically determines key factors of application fraud such as, for instance, the sales channel or the loan amount. This is done univariately as well as by employing a logistic regression, which is found to be a statistically significant approach for profiling loan application fraudsters. Besides in-sample and out-of-sample verifications, we also prove the economic significance of our results by developing a fraud management framework taking the fraud rate, the average default cost due to fraud as well as the fraud screening costs into account.

A Comprehensive Analysis of Nondelivery Fraud at a Major Online Auction Site

Fraud at auction sites is a well-known problem, and yet there are few empirical studies about it. This work helps to fill this gap through the analysis of a one-year long data collection from a major online auction site. The present study tested the effect of reputation, product price, and buyer experience on the outcome of nondelivery fraud attempts. The magnitude and the impact of this kind of fraudulent behavior were also evaluated through various measures, such as fraud rate, number of affected buyers, buyer financial losses, and fraudsters' revenue.

A Defense Mechanism for Credit Card Fraud Detection

Computer security is one of the key areas where lot of research is being done. Many intrusion detection techniques are proposed to ensure the network security, protect network resources and network infrastructures. Intrusion detection systems (IDS) attempt to detect attacks by gathering network data and analyze the information from various areas to identify the possible intrusions. This paper proposes a defense mechanism combining three approaches such as anomaly, misuse and decision making model to produce better detection accuracy and a decreased false positive rate. The defense mechanism can be built to detect the attacks in credit card system using Hidden Markov approach in the anomaly detection module. The credit card holder’s behaviours are taken as attributes and the anomalous transactions are found by the spending profile of the user. The transactions that are considered to be anomalous or abnormal are then sent to the misuse detection system. Here, the transactions are compared with predefined attack types such as cross site, SQL injection and denial of service attacks and then sent to the decision making model to classify it as known/unknown type of attack. Finally, the decision-making module is used to integrate the detected results and report the types of attacks in credit card system. As abnormal transactions are analyzed carefully in each of the module, the fraud rate is reduced and system is immune to attacks.

The Effect of Corporate Governance Reform on Financial Reporting Fraud

In response to financial reporting scandals, Congress and the securities exchanges mandated increases in board and audit committee independence and banned most non-audit services. We exploit these exogenous shocks to examine whether these governance reforms reduced financial reporting fraud. Comparing firms forced to comply with the reforms to firms already in compliance, we find that mandated increases in overall board independence significantly reduced the rate of fraud, while mandating a fully independent audit committee had a weaker effect. Further, banning non-audit services did not reduce the incidence of fraud.

A Robust Unsupervised Method for Fraud Rate Estimation

AbstractIf one is interested in managing fraud, one must measure the fraud rate to be able to assess the degree of the problem and the effectiveness of the fraud management technique. This article offers a robust new method for estimating fraud rate, PRIDIT‐FRE (PRIDIT‐based Fraud Rate Estimation), developed based on PRIDIT, an unsupervised fraud detection method to assess individual claim fraud suspiciousness. PRIDIT‐FRE presents the first nonparametric unsupervised estimator of the actual rate of fraud in a population of claims, robust to the bias contained in an audited sample (arising from the quality or individual hubris of an auditor or investigator, or the natural data‐gathering process through claims adjusting). PRIDIT‐FRE exploits the internal consistency of fraud predictors and makes use of a small audited sample or an unaudited sample only. Using two insurance fraud data sets with different characteristics, we illustrate the effectiveness of PRIDIT‐FRE and examine its robustness in varying scenarios.

Analysis of the Negative Effects of the Automated Teller Machine (ATM) as a Channel for Delivering Banking Services in Nigeria

This paper titled, “Analysis of the negative effects of the automated teller machine (ATM) as a channel for delivering banking services electronically in Nigeria” proposed that the ATM system of delivering banking services not only contribute to the increasing rate of bank fraud but equally lures Nigerians into profligate expenditure. Using a sample of 600 respondents conveniently selected from two states of the federation (Lagos and Anambra), and analyzing the hypotheses formulated with chi-square, it was found that results were consistent with the propositions made. Against these backdrops, it was recommended that banks should; strive to increase their security layers to subvert the tricks of web scammers, limit the amount which customers may be allowed to withdraw at a time and provide electronic alerts to customers’ phone for all transactions carried out on their bank accounts through ATMs, cooperate instead of competing in stemming the ATM fraud menace and educate customers on the need to safeguard their PINs. Government was encouraged to; promulgate laws that will guide e-business including ATMs in Nigeria, provide employment, check the indiscriminate issuance of ATM cards by banks and so on. Customers were advised to; avoid replying unsolicited mails and text messages, not to compromise their PINs, maintain a separate account which is not placed under ATM if they are given to impulsive expenditure. Interested researchers were as well given a focus for further research.

A Defense Mechanism for Credit Card Fraud Detection

Computer security is one of the key areas where lot of research is being done. Many intrusion detection techniques are proposed to ensure the network security, protect network resources and network infrastructures. Intrusion detection systems (IDS) attempt to detect attacks by gathering network data and analyze the information from various areas to identify the possible intrusions. This paper proposes a defense mechanism combining three approaches such as anomaly, misuse and decision making model to produce better detection accuracy and a decreased false positive rate. The defense mechanism can be built to detect the attacks in credit card system using Hidden Markov approach in the anomaly detection module. The credit card holder’s behaviours are taken as attributes and the anomalous transactions are found by the spending profile of the user. The transactions that are considered to be anomalous or abnormal are then sent to the misuse detection system. Here, the transactions are compared with predefined attack types such as cross site, SQL injection and denial of service attacks and then sent to the decision making model to classify it as known/unknown type of attack. Finally, the decision-making module is used to integrate the detected results and report the types of attacks in credit card system. As abnormal transactions are analyzed carefully in each of the module, the fraud rate is reduced and system is immune to attacks.

Health‐Care Data Protection and Biometric Authentication Policies: Comparative Culture and Technology Acceptance in China and in the United States

AbstractA proliferation of health information technology (HIT) policies to implement dimensions of e‐health, including electronic medical records, electronic health records, personal health records, and e‐prescribing—along with expanding initiatives on mobile health in developed countries and emerging technologies—has sparked academic inquiry into the protection of privacy and data and the technology to protect privacy and data. This article examines HIT policies in the United States and in China and the use of authentication technologies to assess biometrics as privacy's friend or foe in different political frameworks with varying conceptions of privacy. An analysis of privacy in the context of health data protection, challenging relations of trust between patients and providers, the increasing perspective of health data integrity as a cyber‐security issue, and the growing rate of medical fraud and medical identity theft may yield findings of a convergence of views of privacy and biometrics unexpected of contrasting political cultures.

Measuring the cost of fraud: an opportunity for the new competitive advantage

Purpose – The purpose of this paper is to provide evidence, from the analysis of 132 fraud risk measurement exercises, of the average costs and rates of fraud. It advocates greater use of more accurate measurement which if monitored and repeated can secure reductions which could amount to a new competitive advantage.Design/methodology/approach – This paper has analysed 132 fraud risk measurement exercises from nine countries in a range of different sectors. Only those which assess a statistically valid sample which have sought and examined information indicating the presence of fraud, error or correctness in each case within that sample; have been completed and reported; have been externally validated; have a measurable level of statistical confidence; and have a measurable level of accuracy were included. Each exercise has been assessed to determine the percentage loss rate (PLR) and the fraud frequency rate (FFR). These data were analysed using Excel to determine average rates and further comparable dat...

DNA barcoding unveils a high rate of mislabeling in a commercial freshwater catfish from Brazil

Background and Aims. Molecular markers have contributed to species authentication by flagging mislabeling and the misidentification of commercial landings. Such tools are of great value since the market substitution of fish of lower value for highly commercialized species is expected to become more pronounced due to a shortage of natural stocks.Materials and Methods. Here we report on the molecular identification 4results from processed fish products (i.e. fillets) and whole fishes sold in Brazilian markets under the common name surubim (Pseudoplatystoma spp.).Results. DNA barcoding revealed the incorrect labeling of around 80% of all samples analyzed, with mislabeling being more pronounced within fillets rather than whole fish.Conclusion. To our knowledge, this is the first report correlating the rate of fraud with processed fish products. The establishment of an official list of acceptable common names for freshwater fish and seafood is urgently needed in Brazil for further trade regulations to take place.

Third Highest Occupational Fraud Rate Afflicts Health Care

Third Highest Occupational Fraud Rate Afflicts Health Care

Corporate Governance Spillovers

Failures of corporate governance at one firm spill over into short-termism and incentives for managers at other firms to manipulate earnings fraudulently due to career concerns and relative performance evaluation. The model predicts that (i) peer governance matters and that the average rate of earnings fraud should be higher when peer governance is weaker; (ii) managers should react more aggressively to changes in relative performance when peer governance is weaker; and (iii) earnings fraud should be most sensitive to peer governance when career concerns are strong. Using data on event-periods associated with fraudulent restatements, I find evidence corroborating all three predictions and the implication that a few bad apples can lead to increased misbehavior at other firms. By studying a specific managerial action, the paper highlights the importance of the role of career concerns and implicit incentives as well as the governance environment in influencing managerial behavior.

Measuring Identity Theft (Version 2.0)

There is no reliable way for consumers, regulators, and businesses to assess the relative rates of identity fraud at major financial institutions. This lack of information prevents a consumer market for bank safety from emerging. As part of a multiple strategy approach to obtaining more actionable data on identity theft, the Freedom of Information Act was used to obtain complaint data submitted by victims in 2006 and 2007 to the Federal Trade Commission. This complaint data identifies the institution where impostors established fraudulent accounts or affected existing accounts in the name of the victim. The data were aggregated and used to create comparative fraud ranks at leading banks. This analysis faces several challenges that are described in the methods section. This version incorporates and is substantially improved by comments provided on versions 1.0 and 1.5 of this report, incorporates new data from 2007, and shifts focus from identity theft at top banks to events at all types of companies. In 2007, fraud events where the victim could identify the institution associated with the incident, were concentrated among a relatively small number of companies. Just ten companies accounted for 30% of events. Verizon was identified by victims more than any other company as being targeted by impostors to commit fraud. AFNI, a collections agency, was next in total number of events. Bank of America improved dramatically over its 2006 numbers, while ING Bank and American Express remained top performers among large institutions.

Measuring Identity Theft at Top Banks (Version 1.5)

There is no reliable way for consumers, regulators, and businesses to assess the relative rates of identity fraud at major financial institutions. This lack of information prevents a consumer market for bank safety from emerging. As part of a multiple strategy approach to obtaining more actionable data on identity theft, the Freedom of Information Act was used to obtain complaint data submitted by victims in 2006 to the Federal Trade Commission. This complaint data identifies the institution where impostors established fraudulent accounts or affected existing accounts in the name of the victim. The data were aggregated and used to create comparative fraud ranks at leading banks. This analysis faces several challenges that are described in the methods section. This version incorporates and is substantially improved by comments provided on version 1.0, released in February 2008 and downloaded over 7,000 times. Unlike version 1.0, this version provides actionable information to consumers on relative rates of identity theft in 2006. According to the measures in this report, American Express, USAA, and Citibank have the lowest rate of identity theft events among top credit card issuers. Among consumer banks, ING Bank and World Savings Bank performed well under every measure. Correlations were calculated for all the statistics the Federal Deposit Insurance Corporation maintains on top banks; generally the number of identity theft events correlates most strongly with measures of institutions size.