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The total impacts of fraud

The impact of fraud goes well beyond financial loss. Fraud impacts people, industries, entities, services and the environment. Understanding the total impact of fraud allows entities to make better informed decisions. Serious impacts can arise from any type of fraud, whether it’s carried out by opportunistic individuals or serious and organised crime groups. However, serious and organised crime can often increase the scale and impacts of fraud.


Human impact

Fraud is not a victimless crime. Fraud can be a traumatic experience that often causes real and irreversible impacts for victims, their families, carers and communities. Those who rely on government services (such as the elderly, the vulnerable, the sick and the disadvantaged) are often the ones most harmed by fraud. Fraud can have a devastating impact on these victims and increase the disadvantage, vulnerability and inequality they suffer. Fraud can also cause lasting mental and physical trauma for victims. Fraud also results in lost opportunities for individuals and businesses.


Government outcomes impact

Fraud undermines the government’s ability to deliver services and achieve intended outcomes. Money and services are diverted away from those who need it and the services delivered can be substandard or unsafe. This can lead to program failure.


Reputational impact

Fraud can affect any entity. However, when it is handled poorly, fraud can result in an erosion of trust in government and industries, and lead to a loss of international and economic reputation. This is particularly true when fraud is facilitated by corruption.


Industry impact

Fraud can result in distorted markets where fraudsters obtain a competitive advantage and drive out legitimate businesses. It can affect services delivered by businesses and expose other sectors to further instances of fraud. It can also result in greater burdens on charities and community services that help those affected by fraud.


Environmental impact

Fraud can lead to immediate and long-term environmental damage through pollution and damaged ecosystems and biodiversity. It can also result in significant clean-up costs.


Security impact

Fraud can undermine national defence and security. It can also damage international standing and affect the ability of nations to get international support. The proceeds of fraud can also fund organised crime groups and terrorism, potentially leading to further crime and terrorist attacks.


Financial impact

Government entities generally lose between 0.5% and 5% of their spending to fraud and related loss based on international estimates. The majority of fraud is undetected and can be difficult to categorise. Measurement exercises can help entities uncover and more accurately estimate their potential fraud losses.


Business impact

Costs for dealing with fraud against government programs are significant and go well beyond the direct financial loss. They can include assessment, detection, investigation and response costs as well as potential restitution. In addition, further costs can include program reviews and audits, and retrofitting or redesigning programs.


More information

This guide explains how to assess, analyse and understand the public impacts of fraud. It combines leading perspectives from the representatives of the International Public Sector Fraud Forum.

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