It’s understandable if Hollywood movies have influenced your impression of white-collar crimes. Because of that, you may have the impression that white-collar crimes only happen at large enterprises with billions in revenue. However, the truth is that any business can be the victim of white-collar crimes, no matter the revenue, number of employees, or industry.
Now, you may be thinking that you’re not worried because you’d be able to spot a corporate criminal amongst your team easily. But that’s actually easier said than done. In fact, it’s common for fraud to be committed by long-serving and well-liked employees with clean records.
That sounds like a lot of doom and gloom, but being aware of white-collar crimes means you can better protect your business. With that in mind, here’s a look at some of the most interesting and alarming stats and facts on white-collar crime.
The Rate of White-Collar Crime
1. A 2022 survey found that 46% of organizations reported having experienced fraud, corruption, or other economic crime in the previous 24 months. (PwC’s Global Economic Crime and Fraud Survey 2022)
2. According to a PwC study, 70% of organizations encountering fraud experienced new incidents of fraud due to disruptions caused by COVID-19. (PwC’s Global Economic Crime and Fraud Survey 2022)
3. Nevada is the biggest fraud hotspot in the U.S., with 18.94 reports of business fraud per 100,000 people. Maryland is second with 18.03, and Arkansas is third with 17.13. (SEON)
4. One survey found that among respondents who experienced embezzlement, 39% saw more than one case in their career. (2018 Hiscox Embezzlement Study)
5. Since 2017, money laundering offenses have decreased by nearly 24%. (United States Sentencing Commission)
Who Are White-Collar Criminals?
6. The average age for white-collar criminals is 41. (University of Cincinnati School of Criminal Justice)
7. More than 70% of white-collar criminals are white males. (University of Cincinnati School of Criminal Justice)
8. Only 6% of occupational fraud perpetrators have had a prior fraud conviction. (ACFE, Occupational Fraud 2022: A Report to the Nations)
9. More than half (62%) of white-collar criminals are married, and 50% are homeowners. (University of Cincinnati School of Criminal Justice)
10. Nearly 66% of white-collar criminals have steady employment. (University of Cincinnati School of Criminal Justice)
11. Twenty-three percent of occupational fraud cases are committed by owners/executives. (ACFE, Occupational Fraud 2022: A Report to the Nations)
12. Only 3% of occupational fraudsters are over the age of 60, but the median loss associated with this age group is $800,000 – far more than any other age category. (ACFE, Occupational Fraud 2022: A Report to the Nations)
13. According to a recent survey, 31% of reported fraud or economic crimes were committed by an internal perpetrator, and 26% resulted from collusion between internal and external parties. (PwC’s Global Economic Crime and Fraud Survey 2022)
14. Forty-seven percent of occupational fraudsters have a university degree, and 18% have a postgraduate degree. (ACFE, Occupational Fraud 2022: A Report to the Nations)
15. The majority (83%) of occupational fraud perpetrators have never been punished or fired by an employer for fraud-related activities. (ACFE, Occupational Fraud 2022: A Report to the Nations)
16. In 2021, 96.5% of securities and investment fraud offenders were men, and 87% had little or no prior criminal history. (United States Sentencing Commission)
Types of White-Collar Crimes
17. Asset misappropriation schemes are the most common type of occupational fraud, accounting for 86% of cases. But it’s also the least costly, with a median loss of $100,000. (ACFE, Occupational Fraud 2022: A Report to the Nations)
18. Financial statement schemes are the least common and most costly type of occupational fraud, at 9% of cases with a median loss of $593,000. (ACFE, Occupational Fraud 2022: A Report to the Nations)
19. Corruption (bribery, conflicts of interest, and extortion) is experienced in 50% of occupational fraud cases. (ACFE, Occupational Fraud 2022: A Report to the Nations)
20. Thirty-two percent of occupational fraud perpetrators commit both asset misappropriation and corruption schemes (ACFE, Occupational Fraud 2022: A Report to the Nations)
21. Fraud and environmental crimes are the most common offenses committed by organizational offenders (corporations, partnerships, unions, trusts, pension funds, and non-profit organizations). (United States Sentencing Commission)
22. Eight percent of fraud cases involve cryptocurrency. Among these cases, crypto was most commonly used for bribery and kickback payments (48%) and converting misappropriated assets (43%). (ACFE, Occupational Fraud 2022: A Report to the Nations)
23. One in eight organizations say they have experienced new incidents of supply chain fraud due to disruptions caused by COVID-19. (PwC’s Global Economic Crime and Fraud Survey 2022)
24. Environmental, societal, and governance (ESG) reporting fraud is a new emerging threat. Only 8% of organizations have experienced ESG reporting fraud (altering ESG disclosures to not reflect a business’ actual activities). But the incentive for fraud in this area may increase as the importance of ESG grows. (PwC’s Global Economic Crime and Fraud Survey 2022)
Detecting and Preventing White-Collar Crime
25. A typical fraud scheme lasts 12 months before detection. (ACFE, Occupational Fraud 2022: A Report to the Nations)
26. Seventy percent of embezzlement cases last for more than a year, while 31% go on for three years or longer. (2018 Hiscox Embezzlement Study)
27. Nearly half of all occupational fraud cases are due to a lack of internal controls (29%) or overriding existing controls (20%). (ACFE, Occupational Fraud 2022: A Report to the Nations)
28. Among fraudsters, 15% display no behavioral red flags. (ACFE, Occupational Fraud 2022: A Report to the Nations)
29. The most common behavioral red flags associated with fraud are:
- Living beyond means (39%)
- Financial difficulties (25%)
- Unusually close relationship with vendor/customer (20%)
- Excessive control issues, unwillingness to share duties (13%)
- Irritability, suspiciousness, defensiveness (12%)
- Bullying or intimidation (12%)
- Divorce/family problems (11%)
- “Wheeler-dealer” attitude (10%)
(ACFE, Occupational Fraud 2022: A Report to the Nations)
30. The primary way that occupational fraud is detected is from tips. Tips account for the discovery of 42% of frauds, nearly 3x more than the next most common method. And more than half of all tips come from employees. (ACFE, Occupational Fraud 2022: A Report to the Nations)
31. Eighty-one percent of businesses have modified their anti-fraud controls following a fraud incident – 75% increased management review procedures, and 64% enhanced proactive data monitoring/analysis. (ACFE, Occupational Fraud 2022: A Report to the Nations)
32. The anti-money laundering software market is expected to grow from $2.11 billion in 2021 to $6.16 billion in 2028. (The Insight Partners)
33. The average fraud detection time for businesses with fraud hotlines is 12 months compared to 18 months for those without hotlines. (ACFE, Occupational Fraud 2022: A Report to the Nations)
34. The United States and Canada is the region with the lowest fraud hotline implementation rate in the world at just 63%. (ACFE, Occupational Fraud 2022: A Report to the Nations)
Prosecution and Punishment for White-Collar Crimes
35. In 2021, the U.S. Attorneys’ Offices charged 5,521 individuals with white-collar crimes – a 10% increase over the previous year. (United States Department of Justice)
36. In 2021, 90.5% of money laundering offenders were sentenced to prison, with the average sentence being 69 months. (United States Sentencing Commission)
37. Twenty-nine percent of occupational fraud cases lead to civil litigation. (ACFE, Occupational Fraud 2022: A Report to the Nations)
38. Fifty-eight percent of occupational fraud cases are referred to law enforcement, 66% of which result in a conviction. (ACFE, Occupational Fraud 2022: A Report to the Nations)
39. The most common form of punishment for occupational fraud is termination (61% of cases). (ACFE, Occupational Fraud 2022: A Report to the Nations)
40. In the last 30 years, U.S. courts have imposed nearly $33 billion in fines on organizational offenders. The average fine was more than $9 million, while the median amount was $100,000. (United States Sentencing Commission)
41. In 2021, the Justice Department’s Antitrust Division brought 25 criminal cases against 29 individuals and 14 corporate defendants, and ended the year with 146 open grand jury investigations – the most in 30 years. (United States Department of Justice)
The Costs of White-Collar Crime
42. According to the FBI, white-collar crime is estimated to cost the U.S. more than $300 billion annually. (Cornell Law School)
43. Certified Fraud Examiners estimate that businesses lose 5% of their revenue to fraud each year. (ACFE, Occupational Fraud 2022: A Report to the Nations)
44. The biggest white-collar crime in U.S. history was an elaborate investment fraud scheme committed by Bernie Madoff that led to upwards of $65 billion in losses. (CNBC)
45. The latest study from the Association of Certified Fraud Examiners found that 52% of victim organizations did not recover any fraud losses. (ACFE, Occupational Fraud 2022: A Report to the Nations)
46. The median loss per occupational fraud case is $117,000, while the average loss per case is $1,783,000. (ACFE, Occupational Fraud 2022: A Report to the Nations)
47. The industries with the top five highest median fraud losses are:
- Real estate: $435,000
- Wholesale trade: $400,000
- Transportation and warehousing: $250,000
- Construction: $203,000
- Utilities: $200,000
(ACFE, Occupational Fraud 2022: A Report to the Nations)
48. California is the state with the highest total losses from fraud at $318 million. (SEON)
49. Fraud incidents caused by an owner or executive have a median loss of $337,000, substantially more than losses caused by managers ($125,000) or employees ($50,000). (ACFE, Occupational Fraud 2022: A Report to the Nations)
50. Frauds committed by individuals with at least 10 years of service at a company result in a median loss of $250,000. By comparison, frauds committed by individuals with less than one year of tenure have a median loss of $50,000. (ACFE, Occupational Fraud 2022: A Report to the Nations)
Protecting Your Business
So now that you know about the impact of white-collar crimes on organizations, how can you protect your business? Having a fraud prevention plan is crucial for any business to get ahead of wannabe fraudsters. But even the most meticulous fraud prevention strategy isn’t 100% foolproof. And, as the stats show, the costs could be substantial if your business is the victim of a white-collar crime.
That’s why supporting any fraud prevention plan with insurance coverage is essential. Having the right insurance plan in place will help protect your business from the costly financial fallout of fraud or other economic crimes. That way you can enjoy Hollywood white-collar crime movies on the screen, but not have to live them.
