March is Fraud Awareness Month and, while it behooves us all to learn how to recognize, prevent and report scams that may directly affect us, there is something else we should be aware of.
We are all victims of fraud every single day.
For example, the federal government loses billions every year to tax fraud. From everyday Canadians improperly or under-reporting income, to corporations hiding cash in shell companies overseas, the national coffers are shortchanged and we all pay in the form of higher taxes and lost government services.
Banks also lose copious amounts of cash to fraudsters.
On Monday CBC’s The National had a fascinating segment on one of the fastest growing scam affecting the financial industry, synthetic identity fraud.
Unlike identity theft, synthetic identity fraud involves creating an entirely fictional person. The scammers do this using real identification, illegally-obtained driver’s licences, social insurance cards, even passports. They use these to open bank accounts, obtain credit cards. They may use the identity to buy expensive items such as vehicles for resale.
And unlike identity theft, where there is a victim who catches on quickly and complains, by the time the fictional person defaults on his credit cards or loans, the real person posing as the is long gone, onto a new identity perhaps. Some of them actually pose as dozens of different fake people at a time.
The report said this kind of scam may be costing the banks $1 billion a year.
Do they compensate for that by reducing their bottom line, dividends to shareholders or executive bonuses. Don’t bet on it.
Insurance companies are also major targets.
In one famous case from Winnipeg a ring of fraudsters ran an elaborate scam in which they rolled back the odometers on recently purchased cars, staged accidents and reported the vehicles stolen. Quincy Adurogboye, the mastermind behind the scheme was sentenced to four years in prison and ordered to pay back Manitoba Public Insurance $150,000. The problem is, the scam cost the provincial insurer $800,000 and that is just one that was detected.
Many other incidents of fraud against insurance companies are never detected. Those costs are passed on to consumers as well.
Another form of fraud that affects us all is workers compensation fraud, which is perpetrated by both employees and employers.
In the case of employees, the most common forms are: getting injured away from work, but saying they were hurt on the job; inflating fairly minor job injuries into something much bigger; fabricating injuries that never took place; claiming an old injury that never quite healed as a recent work injury; and staying off work after an injury has healed claiming to be still hurt.
Employers scam the workers compensation system by: under-reporting payroll to reduce premiums; inflating the experience of their workers to make them cheaper to cover; not obtaining coverage for their employees.
The Canadian Injured Workers Society estimates this type of fraud costs the system more than $2 billion annually.
I imagine humans have been scamming each other since we first learned to communicate. Wherever there is an opportunity for personal gain, someone is going to figure out a way to take advantage and one way or another, we all wind up paying for it.
It is everywhere you look. I recently wrote about fraud and charities. The ongoing Senate expenses scandal is probably just the tip of the iceberg of the misuse of public funds at all levels of government.
It is no wonder so many people find ways of justifying their little daily cheats when they see all the big stuff going on around them.
It would be kind of sad if it wasn’t so maddening.