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Social Media and Fraud Detection

ABSTRACT

Over the course of history, many businesses have failed not because of operating inefficiencies,

but as the result of criminal activities and /or inappropriate activities by others. Many studies

predict that during difficult recessions there will be a rise in economic fraud crimes due to

increased financial pressures. Businesses are the most common target victims of economic fraud,

because typically business deal with financial events. In addition, employees could easily find

the opportunities to commit fraud with incomplete internal control structures in businesses.

Therefore, business must have fraud prevention. It may not be possible to prevent all frauds, but

business should be prepared. Once fraud occurs, businesses should use resources in fraud

detection, to protect themselves from unnecessary losses. This paper not only defines fraud,

social media, and outlines the relationships between social media and fraud detection, but also

presents resources for businesses and investigators to use in fraud investigation and detection.

The directions and perspectives will help with fraud investigation, as well as facilitate businesses

defending themselves from losses caused by fraud and embezzlement.

INTRODUCTION

Criminal activity is inclined to increase during difficult times in the economic cycles; with white-

collar crimes (economic crimes) being the most common (Levisohn, 2009). The National White

Collar Crime Center provides data which shows that from 1990 to 1992, white-collar fraud

arrests increased by 52 percent after the savings and loan crisis in 1990 (Bressler, 2011). Another

spike between 2000 and 2002, fraud arrests increased by 25 percent after the Internet crashed in

2000 (Bressler, 2011). Moreover, two enormous frauds were found at Enron and WorldCom

after the dot-com bubble collapsed in 2000. There were thousands of victims involved and

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millions of dollars in losses (Levisohn, 2009). These economic disasters were alerts to the

business world.

What is fraud? It is done with the intent to deceive; it involves getting something from

others illegally. Fraud usually involves five elements. These include statements that were false,

material, knowingly given, were relied on by a victim, and resulted in damages to a victim or

victims. Fraud is defined as a criminal deception that uses false representations to obtain an

unjust advantage or to injure the rights and interest of others (Albrecht, 2012).

Table 1 and Figure 1 show reports of the national fraud and abuse in 2014 from the

Association of Certified Fraud Examiners (ACFE). Based on 1,483 cases surveyed, it is

estimated that fraud cost an organization 5 percent of their annual revenues. If this estimate is

used with the 2013 Gross World Product, it would result in approximately $3.7 trillion in losses

due to fraud. In addition, the ACFE 2014 report states that nearly 30 percent of the 1483 cases

studied were occupational fraud (ACFE, 2014). Occupational fraud involves abuses of the

structural system of an organization or a business for enrichment of the perpetrators personal

interests by intentional misappropriation of the organization or business assets (Rivera, 2014). A

median occupational fraud caused losses of $145,000 per victim, and 22 percent of the study

cases showed that there was more than $1 million in losses for each organization (ACFE, 2014).

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It is no surprise to see that fraud continues to be a major concern for businesses. The

brutal fact is that these economic crimes have been threatening and harming businesses. Small

businesses tend to suffer more from occupational fraud, since most of them do not have

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safeguards to prevent and detect occupational fraud (Bressler, 2011). In fact, fraud is a universal

crime for businesses around the world. Ten years ago, most people would not have thought about

using Internet searches to collect information to help support their litigation. However, it is very

possible today (Coenen, 2012). The next section of this paper will analyze the literature review

related to social media and fraud detection. After reading this paper, management should have a

better understanding of the relationship between social media and fraud detection. Management

should be able to use social media as an investigative tool for occupational fraud.

LITERATURE REVIEW

Who is most likely to perpetrate fraud? The answer is that anyone could perpetrate fraud.

Fraudsters cannot be distinguished by race, geographic area, demographics, or psychological

characteristics. Often, many of the fraud perpetrators have good profiles or their profiles just

look the same as nice and honest people (Albrecht, 2012). For instance, occupational fraud

perpetrators usually have positions in organizations or businesses. They are just like you, your

friends, or colleagues; but perpetrators have compromised their honesty and integrity to become

entangled in fraud.

Why do people commit fraud? There are many reasons to perpetrate fraud. However,

three key elements are common among all frauds. Those elements include pressure, opportunity,

and rationalization. These three elements refer to the fraud triangle (Albrecht, 2012). Figure 2

illustrates the conditions for fraud that are specific to occupational fraud. It puts opportunity on

top, which means that people with low ethical standards are more inclined to commit fraud when

opportunity is present. Incentive (pressure) and rationalization are on the sides. Figure 2 also

gives examples of employee disgruntlement drivers, such as “career disappointment”, and the

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“company owes me” mentality (Holton, 2009). These examples are reflections of occupational

fraud perpetrators’ psychological characteristics.

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Figure 3 shows that occupational fraud can be classified into three primary categories.

These categories include financial statement fraud, corruption, and asset misappropriation.

Figure 4 shows that in 2014, the cause of 85.4 percent of occupational fraud cases that the ACFE

reported and analyzed was asset misappropriation (ACFE, 2014). Unfortunately, employee fraud

due to asset misappropriation has happened at a high rate in recent years. For example, a former

Federal Aviation Administration (FAA) employee, Keysha Logan committed fraud. She used her

occupational access privileges to approve her personal expenses totaling $82,000 as an FAA

expenditure (OIG, 2010). Another businessperson, Michelle Guy embezzled $2.2 million from

her former employer, HSBC in Brandon, FL (Tampabay, 2013). These examples indicate that no

matter how good an organization’s fraud prevention activities are, some frauds still can and will

occur.

Fraud detection requires technical skills, a number of investigative activities, and is very

time consuming. However, fraud investigators have a new friend - social media (Goldmann,

2012). The advancement in technology in recent years provides two major proactive fraud

detection methods. One is social media being used in the installation of hotlines and whistle-

blower systems. The other is the use of Internet based social media platforms to search and

discover suspicious activity, in an attempt to detect fraud before they become large (Albrecht,

2012).

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The publicly available information sitting on the Internet is amazing. The Internet holds a

phenomenal amount of information for investigators and experts beyond databases. The web’s

capacity to aggregate information about individuals’ habits, hobbies, and interests is primarily

used as a marketing tool, but it also allows for an unprecedented glimpse into the private lives

and minds of investigative targets (Investigations, 2011). The Pew Internet and American Life

project reports that 46 percent of all American adults use at least one social networking site

(Ruotolo, 2012). The percentage of adults using social networking sites jumped from 8 percent in

2005 to 65 percent in 2011 (Cole, 2012). Facebook and LinkedIn collectively boast over 1.7

billion users (Marasco, 2015), and social media has now become an additional investigative tool

in the detection of fraud (Cole, 2012).

The National Association of Insurance Commissioners (NAIC) describes social media

“as a group of internet-based applications that allows for the creation and exchange of user-

generated content” (Cole, 2012). There are so many types of social media. Table 2 shows the

different social media categories and corresponding definitions. The most popular social media

for individuals are Blogs, Facebook, Twitter, YouTube, Flickr, Instagram, and LinkedIn. These

social media sites provide tools for people who wish to interact with each other by sharing

creations, exchanging information and thoughts in virtual communities, and building/maintaining

social relationships with others (Tufts, 2015). Concurrently, these online social network

functions also provide information for fraud investigators. “The very networks that allow us to

co-ordinate human activity can also be used to help identify criminals and uncover their

connections” (Gopal, 2012).

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Current Internet research is largely a manual exercise, but advanced analytics will

revamp how social media is used during investigations (Ruotolo, 2012). This paper will look at

how organizations and businesses are using social media as an investigative tool to collect

evidence that facilitates fraud detection. In addition, it will review how the use of this additional

investigative tool improves the detection of fraud and the bottom line of businesses. Therefore,

the subtopic of this paper will focus on how to use social media as a tool to detect occupational

fraud.

USING SOCIAL MEDIA TO DETECT OCCUPATIONAL FRAUD

First Proactive Approach: Whistleblower System

A number of fraud investigators and attorneys have learned that social media sites are helpful

tools in fraud investigation (Goldmann, 2012). As mentioned previously in the literature review

section, social media provides a function that assists businesses with the installation of

anonymous whistleblower systems. The ACFE reports that employees are valuable sources for

disclosing potential fraud. Figure 5 demonstrates that “tips” from employees using whistleblower

systems has consistently been a contributing factor in detecting occupational fraud. Figure 5

shows that 42.2 percent of occupational frauds were detected by “tips” from employees using

whistleblower systems in 2014, 43.3 percent in 2012, and 40.2 percent in 2010. The ACFE also

points out that “tips” acquired through these whistleblower systems has been the most common

way to detect occupational fraud since 2002, when the ACFE started to collect these statistics

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(ACFE, 2014). Therefore, businesses should most certainly consider installing anonymous

whistleblower systems for employees regardless of the size of the organizations or businesses.

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Businesses should place links on social media sites to the business’s whistleblower

policy. This includes links on sites like Facebook, Twitter, LinkedIn, and the business’ website

since this method is affordable and generally easy to implement. Businesses should state contact

information concisely and clearly for employees or others who wants to report potential

dishonest and fraudulent activities. This includes phone numbers of hotlines, online instant chat

services, online message boxes, and email addresses. These social media connection services can

help businesses reduce the costs and risks of workplace delinquency.

Whistleblowers may not be willing to divulge to the business who he or she is, but that

person can send initial evidence anonymously through submission boxes at the workplace or

other online submissions. Nevertheless, organizations and businesses must setup whistleblower

systems as an anonymous and independent service. The received “tips” should be directly

reported to the board of directors or the owners of the business. Organizations and businesses

should make sure to let their employees and others know that whistleblowers have legal

protection under Sarbanes-Oxley. This will encourage and ensure that people can report potential

fraud without any fear of negative consequences to them personally (SEC, 2012)

In addition, businesses also need to provide independent online whistleblower

information that will assist employees with reporting potential frauds if the company they work

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for cannot or will not provide sufficient whistleblower systems internally. Examples of

independent online whistleblower systems are listed below:

http://www.acfe.com - Association of Certified Fraud Examiners https://www.fbi.gov/contact-us - Federal Bureau of Investigation http://www.nw3c.org - National White Collar Crime Center http://www2.deloitte.com/au/en/pages/risk/solutions/whistleblower.html - A well-known

international certificated professional accounting firm Deloitte

In summary, the fact is that “tips” from employees is the primary method of fraud

detection for organizations and businesses. As previously mentioned, two enormous frauds were

found at Enron and WorldCom. Both of the multi-billion dollar frauds were detected by

whistleblowers. For this reason, social media whistleblower systems play a key role in revealing

many occupational frauds (Sweeney, 2008).

The Second Proactive Approach: A System of Conducting Social Media Searching

When a business receives a report of potential occupational fraud, the business should follow up

by utilizing a social media search system that is shown in Figure 6. There are five steps in using

social media to detect fraud: understanding, searching, analyzing, proving, and advising.

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Understanding: All businesses and individual investigators should understand the four

types of evidence that could be collected in an occupational fraud investigation. Figure 7

presents the evidence square in occupational fraud investigation; it includes testimonial evidence,

documentary evidence, physical evidence, and personal observation evidence (Albrecht, 2012).

Social media searches belong to the documentary evidence category.

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To detect occupational fraud, businesses, investigators, auditors, and employees should

understand fraud indicators and fraud symptoms. Occupational fraud symptoms can be classified

into six groups: accounting irregularity, analytical irregularity, internal control weakness,

extravagant lifestyle, unusual behavior, and tips and complaints (Albrecht, 2012).

Remember, not all of the indicators and symptoms involve fraud. Some of these issues

may only indicate employee work-related concerns, or a desire to do something that will harm

the business. Fraud investigators should have the knowledge to determine whether a potential

fraud exists (Albrecht, 2012). In addition, investigators should identify the purpose of the search

and what specific information is needed before starting to perform the online search (Ioma,

2011).

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Searching: In order to discover suspected fraud activity by using online social media to

search for and filter useful information, investigators can use advanced Google searches.

Investigators can utilize advanced search and filter functions to search for suspects by using a

photograph of the suspect. The advanced Google search can link to any of these social media

sites like Facebook, Twitter, Instagram, and Blogs and allow the investigator to learn about the

suspect’s personal life. Social media allows the investigator to study the suspect’s friends,

family, and other personal information that is related to the suspect (Ioma, 2011). These are some

examples of websites that provide people search functions that could be helpful for fraud

investigators:

http://www.spokeo.com/ http://www.usersherlock.com/

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https://namechk.com/ http://www.intelius.com/

Moreover, investigators can look through these searching tools to link to the social media

sites to discover and analyze the suspect’s behavior, and then use the online documents as

evidence for fraud detection. For example, the United States District Court for the Eastern

District of Michigan dismissed a plaintiff brought suit against her employer that fired her. The

court determined that the employer fired the plaintiff properly because the employer found

evidence of dishonesty from the plaintiff’s Facebook (Francis, 2013). Hence, social media

searching is a powerful tool for detecting occupational fraud.

Analyzing: Not every fraud involves just one perpetrator, and in many frauds that involve

multiple people it is often difficult to find direct evidence from social media networks.

Investigators should analyze suspects’ social networks in order to reveal relationships between

suspects (Goldmann, 2012). For instance, employee A and B have access to breached assets, but

each of them work in different departments. When investigators search their social networks and

find that they share many common friends on Facebook, the fraud investigators may become

suspicious. To average people, it seems like these two employees do not know each other. In

fact, they have been connected with each other indirectly through social media networks in order

to avoid suspicion, because they know that they are doing something that is against their

company’s interest. However, it will become apparent to investigators who are analyzing the

different layers of social media connections in an attempt to uncover the indirect links

(Goldmann, 2012). In this example, based on the social media evidence collected by the

investigators, there is an indication that the two employees collaborated and committed fraud.

The difficult part is identifying the actual connection between these two employees. The

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investigators were able to use social media networks to analyze perpetrators’ connections, which

helps generate a suspect list that can be used to uncover comprehensive and collaborative

occupational fraud (Goldmann, 2012).

Proving: Fraud investigators do not use online social media networks to only search for

suspects. They also can use social media networks to collect evidence that will help prove a

suspect’s guilt. One type of fraud this can be helpful with is billing schemes. Billing schemes

include one company either issuing or possessing invoices that are from a shell company or a

“ghost” vendor. For example, an employee embezzled nearly $1 million from his employer

through forged bills from a shell company that he created. Fraud investigators used a public

records search to prove that the company legally exists, but when the investigators traced the

address and ownership of the company, they found out that the company belongs to the suspect’s

wife (Wells, 2013).

Another example of a fraudulent conversion that was detected by internal auditors

involves a former SUNY Brockport student by the name of David Villasmil. He was a store

manager at the Abercrombie & Fitch store in Marketplace Mall, Rochester NY. He stole from

Abercrombie & Fitch, defrauding the company of over $10,000 by fraudulently issuing store gift

cards to himself and then subsequently selling them to Plasticjungle.com. Unfortunately, for

David, all of these records were kept on a PayPal account, which the internal auditors used to

their advantage (Monroe, 2013). These examples show how fraud investigators can use

Craigslist, eBay, and Amazon to find company assets that should not be available for sale on

these websites, which helps trace perpetrators’ illegal online activity and prove that the

perpetrator is guilty of stealing company assets.

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Advising: Even though there are many different ways to investigate frauds in the

previous steps, one should have fundamental knowledge about how to use social media to

investigate occupational fraud. Businesses must have the capabilities to navigate on social media

sites like Facebook, Twitter, LinkedIn and others, because fraud suspects may use their social

media daily basis. However, fraud detection has a sensitive nature. Businesses need to be clear

on the specifics of the information that is to be sought after by using advanced social media

searching techniques (Ioma, 2011). In addition, businesses should exercise extreme care and due

diligence in finding out how fraud detections are conducted (Albrecht, 2012). While social media

sites are providing tremendous information to fraud investigators and helping with litigation, it

also brings concerns to the public. This is because the rules and regulations for fraud

investigators using social media sites are not being clear. The ACFE has stated that ethical

concerns do not apply to informal investigations of social media sites, since the information on

these sites are available to the public (Goldmann, 2012). As long as the investigators do not

contact the fraud suspects directly, then searching for relevant information on these sites is

considered a completely legitimate fraud investigation technique. Nevertheless, businesses and

fraud investigators need to either consult with an attorney or find out what their state laws are

concerning social media usage for fraud detection (Goldmann, 2012).

Figure 8 displays the Fraudulent Act diagram, which demonstrates a perpetrator’s

actions. When the perpetrator commit fraud (the act), the perpetrator will try to hide their

fraudulent actions (concealment) that could be uncovered by others. Concealment includes acts

such as deleting relevant documents, records, and computer programs that could be

incriminating, or hiding misappropriated assets in secret places or in places that those assets

should not be. Moreover, the perpetrator(s) usually want to transform the assets that they have

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stolen (conversion) into cash, since cash is easy for the perpetrator to use for their personal

needs.

However, the Fraudulent Act diagram also gives investigators hints on how to discover

fraud based on a perpetrator(s) actions. In fact, fraud investigators have turned the Fraudulent

Act diagram into three main fraud element investigative methods: theft act, concealment, and

conversion. The theft act investigative method involves efforts to uncover a perpetrator(s)

fraudulent act by collecting evidence of the actual theft behavior. The concealment investigative

method involves concentrating on the investigation of areas where the perpetrator(s) may try to

conceal their illegal actions. Investigators do this by examining documents and records,

searching computers, and tracing red flags to secret places. The conversion investigative method

involves investigating ways in which perpetrator(s) could have spent or used the assets that they

have stolen. Investigators look at things like the perpetrator(s) life style and whether their assets

have been changed recently (Albrecht, 2012). Opportunities to catch perpetrators most often

comes from the three main fraud element investigative methods. Fraud investigators must pay

close attention to seemingly minor details, and they must be patient while following red flags

during the process of tracing/acquiring useful evidence that can reveal frauds. At the same time,

businesses/investigators need to be aware of the sensitive nature of fraud detection if they want

to be successful in their use of social media sites to investigate fraud suspects.

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CONCLUSION

Fraud is a universal crime around the world. Occupational fraud has the highest percentage of

occurrence and it continues to be a major concern for businesses. Small businesses tend to suffer

more from occupational fraud due to most of them lacking a segregation of duties structure.

Whether the occupational fraud is financial statement fraud, corruption, or asset

misappropriation, it could happen at some point in the economic cycle during times of difficulty.

Therefore, businesses of all sizes should create positive work environments for their employees,

and they must have efficient internal control systems in place to limit or prevent occupational

fraud opportunities.

Once fraud occurs, businesses should use resources and tools for fraud detection, to

protect themselves from unnecessary losses. Figure 9 shows the Fraud Compass. It indicates that

social media environments surround the work environment, fraudsters included. Social media

sites not only help install hotlines and whistleblower systems for fraud detection, but also

provide tremendous information that allows businesses to search for fraud suspects, analyze the

suspects’ connections, and can even provide evidence to prove that a perpetrator converted stolen

assets for personal gain. Since social media is a significant online platform for people wanting to

connect with each other, it is an essential weapon in the arsenal used by investigators to detect

fraud (Gopal, 2012). However, businesses and investigators must keep in mind that they should

consult with an attorney or find out what their state laws are concerning social media usage for

fraud detection, even though searching social media for suspect(s) is not considered as unethical.

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ReferencesACFE. (2014). 2014 Report to the Nations on Occupational Fraud and Abuse. Ausitin:

ACFE.com. Retrieved from http://www.acfe.com/: http://www.acfe.com/rttn/docs/2014-report-to-nations.pdf

ACFE1. (2014, December16). Top Fraud Predictions for 2015: Technology Will Shape the Fight. Retrieved from http://www.acfe.com: http://www.acfe.com/press-release.aspx?id=4294986539

Albrecht, W. S. (2012). Fraud Examination. Mason, OH: South-Westerm.

Bressler, M. S. (2011). THE ENEMY WITHIN: A STUDY OF EMPLOYEE CRIMINAL ACTIVITY AND ITS IMPACT ON BUSINESS. Entrepreneurial Executive, p49-61. 13p.

Coenen, T. L. (2012). Commentay: Fraud Files: Social media and other information sources for litigation. Wisconsin Law Journal.

Cole, C. R. (2012). The Use of Social Media by Insurers and Potential Legal and Regulatory Concerns. Journal of Insurance Regulation. , p181-196. 16p.

Francis, V. L. (2013). Social media and employee monitoring: new lessons for employers. Employee Relations Law Journal, P59. Retrieved from http://go.galegroup.com/ps/i.do?id=GALE%7CA340944637&v=2.1&u=brockport&it=r&p=EAIM&sw=w

Goldmann, P. (2012, February 5). Social Media Sites: The Fraud Investigator’s New Best Friend... But “Friending” Can be Risky. Retrieved from http://www.acfe.com: http://www.acfe.com/fraud-examiner.aspx?id=4294971928

Gopal, R. D. (2012). Social network meets Sherlock Holmes: investigating the missing links of fraud. Computer Fraud & Security, P12-18.

Holton, C. (2009). Identifying disgruntled employee systems fraud risk through text mining: A simple solution for a multi-billion dollar problem. Decision Support Systems, P853-864.

Investigations, T. f. (2011). Tips for Online Investigations. Security Director's Report, p1-15. 4p. 1 Graph.

Ioma. (2011). Tips for online investigations. Security Director's Report, P1. Retrieved from http://go.galegroup.com/ps/i.do?id=GALE%7CA259386058&v=2.1&u=brockport&it=r&p=ITOF&sw=w

Levisohn, B. (2009). Experts Say Fraud Likely to Rise. BusinessWeek Online, p6-6.

Marasco, J. I. (2015, Apr 29). Fraud Facts: Scammers keeping up with social media. Rochester: Daily Record. Retrieved from eds.a.ebscohost.com:

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http://eds.a.ebscohost.com.ezproxy2.drake.brockport.edu/ehost/detail/detail?sid=346b8e75-b8ff-4dae-92c4-fa516ec93005%40sessionmgr4004&vid=2&hid=4103&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=L54899313DRNY&db=n5h

Monroe. (2013). 2013 Annual Reort. Rochester, NY: The Monroe County District Attorney's Office.

OIG. (2010, September 3). FAA Employee Arrested for Theft of Government Property. Retrieved from https://www.oig.dot.gov: https://www.oig.dot.gov/library-item/29766

Peterson, J. M. (2014). In the Matter of EFP ROTENBERG, LLP. Rochester, NY: SECURITIES AND EXCHANGE COMMISSION.

Rivera, J. (2014, May 21). What Is Occupational Crime? Retrieved from http://www.legalmatch.com: http://www.legalmatch.com/law-library/article/what-is-occupational-crime.html

Ruotolo, J. (2012). SOCIAL MEDIA SLEUTHING. Claims, p20-23. 4p.

SEC, U. (2012, December 27). Information on Whistleblower Protection Act and Whistleblower Protection Enhancement Act. Retrieved from https://www.sec.gov: https://www.sec.gov/eeoinfo/whistleblowers.htm

Sweeney, P. (2008). Hotlines Helpful for Blowing the Whistle. Financial Executive, P28-31.

Tampabay. (2013, March 5). Woman admits to theft of $2.2 million in HSBC employee incentives. Retrieved from http://www.tampabay.com: http://www.tampabay.com/news/courts/criminal/woman-admits-to-theft-of-22-million-in-hsbc-employee-incentives/2107123

Tufts. (2015, November 25). Social Media Overview. Retrieved from http://webcomm.tufts.edu: http://webcomm.tufts.edu/social-media-overview13/

Wells, J. T. (2013). Corporated Fraud Handbook. Hoboken.New Jersey: John Wiley & Sons,Inc.

Table 1. Geographical Location of Victim Organizations

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Region Number of Cases

Percent of Cases

Median Loss(in U.S. dollars)

United States 646 48.0% $100,000

Sub-Saharan Africa 173 12.8% $120,000

Asia-Pacific 129 9.6% $240,000

Western Europe 98 7.3% $200,000

Eastern Europe and Western/Central Asia 78 5.8% $383,000

Canada 58 4.3% $250,000

Latin America and the Caribbean 57 4.2% $200,000

Southern Asia 55 4.1% $56,000

Middle East and North Africa 53 3.9% $248,000

Figure 1. Distribution of Dollar Losses

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Figure 2. Fraud Triangle – Employee

Disgruntlement Drivers

“Company owes me,” for instance because pay is perceived to be low

I work too hard for this company

Opportunity

Incentive

Conditions for fraud

Rationalization

Career disappointment Layoffs, known or

anticipated Expected changes in

compensation or benefits Rewards inconsistent with

expectations

Less than $200,000

$200,000-$399,999

$400,000-$599,999

$600,000-$799,999

$800,000-999,999

$1,000,000 and up

0% 10% 20% 30% 40% 50% 60%

51.9%

12.7%

6.9%

2.9%

2.0%

23.7%

55.5%

12.8%

5.7%

3.5%

1.9%

20.6%

54.4%

11.8%

6.6%

3.4%

1.8%

21.9%

2014 2012 2010

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Figure 3. Occupational Fraud and Abuse Classification System (Fraud Tree)

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Figure 4. Occupational Fraud by Category – Frequency

Table 2. Social Media Categories and Corresponding Definitions

Categories Definition Examples

Blogs

Services that allow the publication of discrete entries (often containing reflections, comments, and hyperlinks) provided by an author or company; often allows interactivity between and with readers

Lulu Blog Wegmans Blog Google Blogspot

Bookmarking Sites

Services that allow users to save, organize, and manage links

Pinterest Delicious Licorize

CrowdsourcingServices that allow users to obtain needed services, ideas, or content by enlisting contributions, either paid or unpaid, from a large number of people online

Crowdspring oDesk PieceWise

Asset Misappropriation

Corruption

Financial Statement Fraud

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

86.3%

32.8%

4.8%

86.7%

33.4%

7.6%

85.4%

36.8%

9.0%

2014 2012 2010

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Discussion Forums

Services that allow for discussion among users, frequently moderated by one or more individuals

DelphiForums Adobe Community Google+

MediaSharing

Services that allow a person to upload and share pictures, video, and audio files

Flickr YouTube Instagram

MicroblogsServices that focus on short updates to subscribers, mostly text-oriented, although a few allow other media

Twitter Tumblr Plurk

Social Commerce

Services that allow users to buy and sell products and services online

Craigslist eBay Amazon

SocialNews

Services that allow users to post news items or links to articles and vote on them

Digg Reddit Upworthy

SocialNetworks

Services that allow users to connect with others of similar interests, both personally and professionally

Facebook Linkedin Myspace

Virtual Game Worlds

Services that allow users to interact in a massively multi-player online role-playing game

World of Warcraft Lord of the Rings

Online Runescape

Virtual Social Worlds

Services that allow users to mimic real world interactions

Second Life Small Worlds Gaia Online

Wikis Services that allow collaborative editing of content and structure by its users

Wikipedia WikiAnswers LyricWiki

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Figure 5. Initial Detection of Occupational Frauds

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Figure 6. A System of Using Social Media to Detect Fraud

Understanding

Searching

Analyzing

Proving

Advising

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Figure 7. Evidence Square in Occupational Fraud Investigation

Testimonial Evidence

Documentary Evidence

Physical Evidence

Observation Evidence

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Figure 8. The Fraudulent Act

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Figure 9. Fraud Compass

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