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The Changing Face of Fraud in Asia

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The Changing Face of Fraud in Asia

by Paul Smith, Experian Asia Pacific, 04 August 2010
topics:
Risk Management
tags:
Experian first-party fraud fraud fraud management Paul Smith third-party fraud

Fraud is a major cause of revenue loss for many organisations, particularly those in the financial services, retail banking and telecommunications sectors. Despite the attention of regulators and companies' investment in controls, it remains one of the most problematic issues worldwide. In the current climate, with revenues under pressure and cost management a focus, effectively and efficiently tackling fraud is a real priority for organisations across the globe.

 
We at Experian detect five emerging fraud trends that we believe pose threats to businesses in Asia Pacific: rising first-party fraud, mortgages as focus of applications fraud, increasing insurance claims fraud, targeting of mass consumers for fraud, and surging insider fraud.
 
Emerging trends
The following are the five emerging fraud trends and an explanation of the threat they represent to businesses in Asia Pacific.
 
  • First-party fraud levels will rise: Fuelled by financial stress from challenging economic times, more consumers are manipulating their own details to obtain financial services.
 
In the commentary on its Global Economic Crime Survey 2009, the PricewaterhouseCoopers (PwC) leadership team maintains that fraudsters need an incentive or pressure to engage in misconduct and an opportunity to commit fraud. The impact of the economic downturn and ongoing financial climate across the region has put a lot of pressure on job security, with people often feeling pressured about their financial security. Reorganisation, job cuts, stricter cost management and more stringent targets are all having an impact.
 
In this climate, ethical judgment can be easily compromised. Interestingly, two thirds of respondents to the PwC Global Economic Crime Survey felt that increasingly difficult targets were the most likely reasons for greater fraud risk. In these circumstances, first party fraud (including insurance fraud) and pressures on staff to collude in fraudulent activity is likely to rise.
 
  • Mortgages have become a focus for applications fraud: With the collapse of the sub-prime lending market, mortgage fraud rates in the mainstream mortgage market will rise in 2010.
 
Asia has some of the world’s hottest housing markets. The top four positions in the global index for the first quarter of this year compiled by London-based broker Knight Frank LLP are held by Asia-Pacific countries. China overtook Hong Kong as the world’s hottest housing market, with prices rising at more than double the rate of anywhere else.
 
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