FraudJournal Blog

August 22, 2011

Is Ethics Hard-wired or Learned


I was reading a posting in LinkedIn by Fernando A., in the ACFE group, titled “Pants on Fire! Children and Lying“. The link led to a site called delanceyplace.com 8/18/11 – children and lying. The article a study into the frequency of children telling lies and whether this was indicative of a future problem. It seems that children who lie well are cognitively more advanced and are able to hide their tracks better. They tend to grow up and be more capable of dealing with complex situations, such as employment that requires quick problem solving or outside of the box thinking. The article suggested they might become bankers; I wondered about other financial positions that have recently been in the headlines for manipulation of funds and factual information.Then I thought about the recent trends in education for forensic accounting and fraud investigation. And what about learning to understand the federal tax code and recent gloable accounting issues.

Today’s generation is faced with making choices for more than which college to attend or job for a career. They have become a self-monitored social network of information and ideas. They want their lives to have impact, their efforts to matter, and their path to move at the rate that technology limits them. And I ask myself, what were they like as children? How did they interpret whether to help each other to obtain the advancement they rationalized as necessary to reach either their own goals or their family’s goals. I mention family because so many children now have been pushed through the process of high grades for college and then a better future. Does all of this push to succeed on a fast track impact their view of ethical standards?

Last week I was talking with a college professor who teaches at North Seattle Community College. They have created a new Certificate of Fraud to help students prepare for a career in fraud fighting. One of the topics discussed was about how students’ views of ethical behavior is changing nationwide. Does this generation of students feel differently about sharing information and taking risks that a previous generation might see more black and white. And if so, will that impact how they investigate fraud?

I don’t have an answer, but it poses the question of whether the “perceived need” to commit a fraudulent act will need to be redefined into less black and white and into more levels of grey. I hope not, but as those of us currently in the trenches age, and others come into the roles of leadership, what do they interpret ethical behavior to mean.

So now I am back to whether or not ethics is hard-wired or learned at an early age and how does that affect the fight against fraud. Employers are already being challenged by young professionals on what they expect as employees. Perhaps this generation of young professionals will need to show the veteran fraud fighters what they see as the solutions to a potential fraud wave looming in the future. Elder abuse and exploitation, cyber crime, and white-collar crimes will continue to rise as there is a shift in which population is taking the lead.

My vote is on this upcoming generation of professionals to take everything to the next level with technology and all its trappings. And I still ask, what were they like as children? Were they good liars too?

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August 8, 2011

Restaruant Breach Leads to Fraud Article


First, thank you to all who inquired to why my lack of posts; we had a death in the family that required my attention.

THIRD PARTY SECURITY RISKSWhy Compliance is Key for Everyone

Those of you who deal with fraud in the retail and restaurant industry are very familiar with skimmers; for those who don’t, we are talking about the hand-held devices that skim the financial information from your credit cards. These little devices are the bane of fraud fighters around the world. And they are getting smaller and more invasive every day. But the recent problem to hit the fraud newsletters and blogs (see article: Restaurant Breach Leads to Fraud by Tracy Kitten, Managing Editor at Bank Information Security), is the breach at a Texas restaurant from a hacker that gained access to the third-party vendor who processes their credit card transactions.

Restaurants have worked hard to make sure their customers’ credit/debit card information is safely handled, that their employees are following the rules, and all the while attempting to keep up to date on technology. However, the costs to upgrade each time a new software comes out or piece of equipment is available, makes a small business wince. And by nature, restaurants are just plain vulnerable to fraud due to the high level of transactions and tendency for high employee turn-over.

But the recent talk of the town is the breach in Texas; not by skimmer, but a third-party vendor that handles the point-of-sale (POS) system information for the restaurant. The Sheriff’s department are reviewing the details with the Secret Service, but they have come to the conclusion that back in early April and mid-May, the electronic information was intercepted by the hacker who had infected with POS system with a virus to steal payment card transaction data. By July, fraudulent charges began appearing. The most recent restaurants hit in the Walker County, have been “fast-casual diners and pizzerias”.

Mr. Neal O’Farrell, founder of the Identity Theft Council stated that “small businesses are often as much the victim of the breach as their customers are”.  As more and more security breaches become types of cyber attacks, small businesses need to start taking a look at their vendors and asking the hard question of “what are they doing to reduce fraud risk” and “how can we collectively reduce the risk”. Merchants that provide the readers might help by offering better trade-in offsets to reduce costs and promote use of the newer equipment and software available. I can’t remember when it was, but I remember I was shocked to find a business that still had a merchant device that printed out the entire credit card number on my receipt.

As the economy gets tighter and continues to stretch our budgets, fraudsters are going to find the chinks in our armor as we become tired a lacx in our effort to be careful; we need to be diligent about consistently finding ways to reduce the risks of fraud. We have to find new ways to help each other out and not rely on the credit card companies to solve the problem. It’s hard to cheat an honest person, they take the time to notice what is going on around them, and they ask questions. Let’s all take time to think about how we can become better at detecting and deterring fraud so we don’t end up having to defend against it.

 

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