Ignore waving red flags? Pay the cost

Organizations can’t afford to be oblivious. Anti-fraud professionals are trained to be skeptical. They should teach their “trust but verify” skills to all in their spheres. Here are some cases in which the players didn’t see (or refused to acknowledge) flaming-red flying flags and paid the cost in loss of cash and reputations.

A typical fraud case lasts 14 months and costs, on average, more than $1.5 million, according to the 2020 ACFE Report to the Nations. And those are just the cases organizations find. Of course, they fall prey to fraud because they continue to ignore red flags. Failing to investigate can be enormously costly. Witness the MoneyGram case.

On Nov. 9, 2012, MoneyGram International Inc., a global money services business, agreed to forfeit $100 million and enter into a deferred prosecution agreement with the U.S. Department of Justice (DOJ). MoneyGram admitted to criminally aiding and abetting wire fraud and failing to maintain an effective anti-money laundering program.

The U.S. government explained that MoneyGram had received thousands of complaints from consumers who were fraud victims, yet the company didn’t terminate the suspected agents. The fraud schemes generally involved MoneyGram agents sending elderly consumers false notifications that they’d won the lottery, had been hired as secret shoppers or qualified for loans. The agents convinced the consumers to set up MoneyGram accounts and sent them payments for taxes or processing fees.