Annual report - 2007
"The State of the Fraud Fight"
An excerpt from the full report
America’s economy grows increasingly unsteady. How does it affect the fraud battle? No doubt the economy is stretching fraud fighters, and motivating many swindlers into action.
Economic hard times — and how we respond —could rank among our defining issues for the next couple of years. Some state fraud bureaus already have seen their budgets cut. At least one state — and maybe others — are seeking to shift anti-fraud funding into other programs.
Difficult times also can create an invigorating call to action. They can inspire in fraud fighters a sharper focus on priorities, and on the essentials of success. Pressure can help anti-fraud operations become more-effective, and better-positioned to thrive when good times return.
But today’s unruly economy doesn’t drive all of our challenges. America itself is changing — we’re a growing, polyglot nation of diverse people from many lands. And fraud is changing as well. Fraud fighters must continually rethink how we combat this crime. This means acquiring new skills, new field intelligence, creative new thinking.
We must put swindlers permanently on the defensive, forcing them to respond to our moves.
Have fraud fighters turned the corner against swindlers? With billions of dollars stolen each year, few would argue fraud is in retreat. But thousands of criminal convictions each year tell us that swindlers hardly own the streets, either.
The truth lies somewhere in between. So we must put swindlers permanently on the defensive, forcing them to respond to our moves. Here are some of our challenges, now and in the years ahead:
Economy: More crime? Rising inflation…possible recession…corporate layoffs…soaring gas prices…exploding home foreclosures. Many more Americans are worried, and feeling financial pain. Some may seek the easy way out by torching their homes, businesses or cars for insurance money. Workers facing layoffs might be tempted to make bogus workers comp injury claims. Hard-hit businesses could underpay workers comp premiums. Small businesses could fall victim to fake liability and health coverage.
Economy: Fewer resources? New fraud-fighting money will be harder to find in many states that face funding crises. Some state fraud bureaus face possible cutbacks. Overall fraud bureau budgets have flattened out. Fraud legislation that requires much new funding could be harder to pass. Fraud fighters thus may need to seek creative funding sources or reinvent their operations for more efficiency.
Better data & research. Fraud may be the least-measured of America’s major financial crimes. To combat fraud with sharper aim and precision, fraud fighters need better field intelligence. We can better focus our efforts on the most-damaging crimes. Detailed data can help convince lawmakers to pass anti-fraud laws. Public outreach messages to consumers should be based more on science and less on gut instinct.
Reverse lax public attitudes. Consumers are morally backsliding. They tolerate insurance far fraud more today, the coalition’s research shows. Yet insurers and government devote pitifully few resources to convincing people that fraud is a socially deplorable crime. Do we even know if our anti-fraud messages are so much hot air? Fraud fighters must reverse the lax social attitudes that allow fraud to thrive. That means funding campaign-quality outreach efforts.
Take down crime leaders. More states need to permanently yank the licenses of doctors, lawyers, chiropractors and other licensed professionals who commit insurance fraud. They’re usually are the brains behind large fraud operations that steal billions of dollars. They should be permanently booted, yet few states have laws that automatically bar them for fraud convictions. This should be a legislative goal.
Adapt to shifting demographics. Tens of millions ofnewcomers from Asian and Spanish-speaking nations are becoming America’s majority population. Fraud fighters need to educate them about the costs of fraud, and how to avoid being victimized. This requires language skills, cultural knowledge and closer ties to their communities. Similarly, Gens X&Y are coming of age. Do we know how to reach these young adults with pre-emptive messages?
Deter with stronger punishment. Anecdotally, too many convicted swindlers appear to receive punishments that only reward crime and offer too little deterrent value. We must study fraud sentences in detail, determine if the courts are coddling them, and develop strategies to ensure fair and consistent punishment. Similarly, are licensing boards fairly punishing dishonest doctors, lawyers, chiros and others? We must learn the facts, and then act.
Join Anti-Fraud Groups. Fraud fighters are a community, united by a common goal. Member organizations play vital roles that reward members with practical business benefits. Networking, acquiring case leads, helping pass tough fraud laws, conducting research, reaching and educating consumers. Groups such as the Coalition Against Insurance Fraud, NICB, NHCAA, IASIU and others help make the fraud fight stronger every day. Join these groups, and support them.
