Differences Between Business Fraud and Consumer Fraud

While both business fraud and consumer fraud losses are increasing, the dollar value of the average business fraud loss far exceeds the average amount of a consumer fraud loss. Studies have shown that business fraud losses can be up to 10 times larger in terms of dollar amount than consumer fraud losses. Some of the reasons for this include:

• Transactions involving business lending often utilize ineffective fraud prediction tools in the application process, and some organizations may not be using any fraud prediction tools for business lending. As a result, perpetrators have migrated toward business transactions.
• When identity theft is involved, it generally is much easier for a perpetrator to steal a business identity than a consumer identity. Most business information is readily available through public records and Internet searches. Additionally, to commit fraud some perpetrators will go as far as setting up incorporation papers, a store address and a phone number for the business in order to seem legitimate.

Given the increase in small-business fraud, organizations should take proactive steps to obtain as much verifiable data as possible and implement effective fraud prediction programs to aggressively protect themselves against fraudulent activity and the resulting losses