Fraud Statistics

The following fraud statistics come from an exhaustive study performed by the Association of Certified Fraud Examiners:

1. Typical U.S. organization loses 5% of its annual revenues to fraud.

2. Applied to US Gross Domestic Product for 2006, this translates to approximately $652 billion in total losses.

3. Fraud schemes can be very difficult to detect. The median length of the schemes in the study was 18 months from the time the fraud began until the time it was detected.

4. Occupational frauds (those perpetrated by organization employees) were much more likely to be detected by a tip than by any other means such as internal or external audits, or internal controls.

5. Organizations with anonymous fraud hotlines suffered a median loss of $100,000 as compared to $200,000 for those that did not have fraud hotlines.

6. The median loss experienced by organizations with fewer than 100 employees was $190,000 per scheme. The most common occupational frauds in small businesses involve:

a. Employees fraudulently writing company checks
b. Skimming revenues
c. Processing fraudulent invoices

7. The loss caused by occupational fraud is strongly related to the position of the perpetrator. Frauds committed by executives caused a median loss of $1,000,000. This was nearly five times more than the median loss caused by managers, and almost 13 times as large as the median loss caused by employees.

8. The median recovery among victim organizations was only 20% of the original loss. Almost 40% of victims recovered nothing at all.

9. Most occupational fraudsters are first time offenders. Less than 8% of the fraudsters had a previous conviction for a fraud-related offense.

10. The most cost effective way to deal with fraud is to prevent it.