How Does Fraud Affect Individuals, Consumers And Organizations?

1. What is Fraud?
Fraud is an intentional scheme created by an individual or party to obtain assets especially money from a victim based on false representation of the facts.
2. How does fraud affect individuals, consumers and organizations?
Fraud affects individuals and consumers by the amount they must pay for products and services. The price of the products reflects a portion of what the organization needs to recover and pay portions of the bill that comes from fraud detection and investigation. The organization that is affected by fraud loses a dollar of their net income for every dollar of fraud committed by them or another individual.
3. List and describe the five different types of frauds.
 Employee embezzlement – An employee uses

 Management fraud occurs when executives of a company use their power to misrepresent the financial statement of their company to make their company look better to investors.
 Investment scams and other consumer fraud occur when a perpetrator makes a victim trust them to give money or invest their money in corrupt schemes. Most of these frauds occur over the phone, by mail or on the internet.
4. What is the difference between civil and criminal laws?
Criminal law is a body of rules that are made to punish those who commit a crime against society. Crimes that are punished under criminal law are those that may put the society at risk of injury. Civil law presides over private matters and may govern the relationship among a victim and perpetrator. Civil law seeks restitutions to pay for private rights that were taken.
5. For each of the following, indicate whether it is a characteristic of a civil or a criminal case:
a. Jury may consist of fewer than 12 jurors = Civil Case
b. Verdict must be unanimous = Criminal Case
c. Multiple claims may be joined in on action = Civil

In employee fraud, the employee is stealing assets from the employer or company in which they work for. In management fraud, a high-ranking executive is perpetrating the crime and is misrepresenting the company’s financial statements look better than they should. In management fraud, the investors are considered the victims of fraud. In its simplest form the difference is that employee fraud is committed against the company and management fraud is committed for the company.
10. Why are accurate fraud statistics hard to find?
Accurate fraud statistics are hard to find because some disputes are not made publicly known so the organizations that research the cases of fraud are not going to get the full picture.
11. Describe the relationship between fraud, net income, profit margin and the revenue required to make up for fraud losses.
One dollar of net income is reduced for every one dollar of fraud committed. For a company to recover after fraud the extra revenue that would have to be made would be the profit margin times the amount of fraud loss the company acquired. In mathematical terms, it would be additional revenue = profit margin (x) fraud