who needs this industry, we've got Applebees and Walmart. and american are all going to get rich selling each other real estate at ever higher prices, aren't we?
Call centres in general have become a major target for corporate fraud, with some gangs even funding people through university so they can access jobs further up the management ladder, and therefore making it easier to perpetrate higher levels of fraud.
But now experts say that the trend of off-shoring these operations has presented a new set of problems.
Ken Milliken, head of the forensic team at KPMG Scotland, says: “You can gain access to personal details if you work in a call centre and, if you are unscrupulous, set up an identity fraud or even pass along credit card details to someone else . It doesn’t take that much to plug a thumb drive with a software programme into the back of a computer that records all the key strokes on that computer .
“If the call centre is offshore, the interesting question becomes if somebody in say India moves money from a Scottish account to another Scottish account, where has the crime been committed? Can Scottish police do anything about it? It’s not clear whether they have jurisdiction but at any rate it would be much more difficult to investigate.”
The problem was highlighted at the KPMG Scottish Fraud Conference held in Glasgow last week by speakers such as David Leitch, head of the fraud and financial crime unit at the Strathclyde Police Force.
New business practices and advances in technology have given criminals more avenues to pursue and are contributing to a steep rise in fraud.
According to KPMG’s bi annual Fraud Barometer, the total value and number of cases in the first five years of this decade have already exceeded all those of the 1990s. In the first six months of 2005, cases totalling £249 million were brought to court, £9m of which came from Scotland. The true cost is difficult to judge, however, as many businesses never report the crime.
Other strategies that are contributing to the explosion are so-called long firm frauds, where someone sets themselves up as a wholesaler and places orders with suppliers with no intention of ever paying for the goods. The company then dissolves and disappears.
“Small suppliers are always very interested in getting sales and they are the most vulnerable to this fraud,” says Milliken. “It’s a big problem in Scotland. Often a company will go under thinking it is because of a bad debt and don’t realise they’ve been a victim of a crime until they are in liquidation.”
Although large financial institutions and insurance companies are catching up with the criminals by, for example, investing in transaction monitoring systems, not all companies are putting in the resources. Nor are they co-operating as much as they should.
“What doesn’t happen in Scotland is the sharing of information. Organisations tend to keep their fraud problems to themselves,” says Milliken. While this might ward off short-term publicity, it lets fraudsters move on to the next victim.
He says managers should ensure all employees are aware of their stance on fraud and follow through with prosecutions to send a message to others. He also advises that proper controls are put in place so that no one person ever has the ability to create a transaction, process it, authorise and make a payment. And he says businesses must make better use of the information in their systems to detect potential fraudsters.
“ You can look at dates of transactions. Are they on Saturdays and Sundays, when nobody processes transactions? Are there round sums, which are very unusual? Software is available to detect these things.”
13 November 2005