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This article was originally published on The Province.
March is Fraud Awareness Month and with that in mind The Province, along with accounting firm MNP, commissioned a poll to determine the risk and prevalence of fraud in B.C. Carried out by the market research firm Mustel Group, the survey got responses from 400 individuals and 200 businesses from across B.C.
The Province will be running a three-part fraud series, starting today with a look at how scams can affect the victim and how fraud has changed over the years. On Tuesday, we'll examine the value of whistleblowers in uncovering fraud. The series wraps up on Wednesday with a look at small businesses that have been defrauded and the results of a survey commissioned by the Canadian Federation of Independent Business.
Ray Silver wasn't out of pocket a lot when he was conned into accepting less firewood than he'd paid for.
Maybe a couple hundred bucks, he realized, once the wood had been dumped and he'd stacked it only to discover a third of what he'd paid for wasn't there.
But the Shawnigan Lake resident said the fraud has significant impact on people such as himself.
"I'm a pensioner with virtually no money to squander," he said.
More than one in four residents in B.C. have been a victim of fraud, according to a survey commissioned by The Province and the accounting firm MNP and carried out by market research firm The Mustel Group.
"Fraud does tremendous harm," said Pat McParland, a forensic accountant with MNP in Vancouver. "I've worked on cases where people committed suicide ... or attempted to commit suicide, cases where people have lost their life savings and have had to go back to work late in their lives.
"The damage is huge." The survey of 400 individuals found that 27 per cent had been victims of fraud, most of them in the past five years.
Yet 44 per cent of respondents considered the risk of fraud occurring to them to be low.
Another 48 per cent rated the risk as medium.
It's a classic case of thinking, it can't happen to me.
But we are all vulnerable, according to the experts.
"Yes, we are, exactly," said McParland, who has worked on hundreds of cases in more than a quarter-century as an investigative and forensic accountant. "In my view of the world and with my experience, the risk of fraud is high.
"You can take steps to protect yourself and reduce the end risk. But the risk is still there."
Police forces everywhere encourage people to report fraud, no matter how trivial the dollar amount might be. Last week, the RCMP's commissioner of competition made a special plea for fraud victims to step forward.
"Fraud is a crime that threatens every Canadian regardless of age, education or income," John Pecman said. "The best way to put a stop to fraud-related crime is to recognize it and report it to the agencies fighting fraud on the front lines."
That's the only way the perpetrators are going to get caught.
"Fraud is under-reported," Sgt. Linda Grange, a detective with the Vancouver Police Department's financial crime unit, said. "People are embarrassed or they might not think it's worth it to report it.
"In the grand scheme it's important to us, but an individual who lost $50, they might not think it's worth it."
Victims of fraud, once bitten twice shy, were more likely to rate the risk of fraud happening to them higher than non-victims, in the Province/MNP study. Still, even having been burned once, 29 per cent still ranked the chances as low of fraud happening to them again.
Of those who had experienced fraud in the past five years, 68 per cent rated the risk of it happening again as medium, as opposed to victims whose fraud had happened more than five years ago, 49 per cent of whom rated the risk as medium.
MNP's McParland tells the story of a medical professional and his office manager.
The two were godparents to each other's children. She, it turned out, had been misappropriating money for years.
"The sense of betrayal is huge," McParland said. "A common complaint made to investigators of fraud is, 'I trusted them, they are the last person I would have suspected of doing something like this."
Fraud isn't like a stickup or nighttime burglary, instances where you know pretty much immediately that you've been robbed. Fraud is insidious, it can go on for years and years undetected before being uncovered.
Each case is unique, like a fingerprint, McParland said. But if there is a common element, it's the victim trusted the fraudster. No one is suggesting we all stop trusting each other. Trust is one of the core components in being the social animals we are.
Instead, McParland quotes an old Russian proverb Ronald Reagan liked to use: Trust, but verify.
"You want to live your day-to-day life trusting people, but verify what they tell you before you put money in their hands."
Categories:Valuation, Forensics and Litigation Support
Related Topics:Fraud; Studies
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