Financial institutions have been inundated with fraud losses for the past several years and the COVID-19 pandemic and the overall downturn in the economy have only made things worse. The Federal Bureau of Investigations (FBI) reports that natural disaster has historically brought fraudsters out of the woodwork, pouncing on a pool of vulnerable victims: the more catastrophic the event, the more active the fraudsters. The COVID-19 pandemic was arguably the worst worldwide disaster in decades, and an increase in fraud has been detected on a wide scale. While some of the recent trending fraud schemes are not new, they have been transformed to prey on communities already dealing with unprecedented times.
The downturn in the economy has undoubtedly affected fraud statistics as well. According to PWC, rising prices can have substantial implications on fraud risks. Inflationary periods are likely to exacerbate all three components of the fraud triangle, those being incentive, opportunity, and rationalization. With surging costs of living and financial hardships, individuals will potentially have added incentives to carry out fraud. They will likely consider the economic problems faced to be a rationalization of their actions.