Insider Fraud
Insider fraud, sometimes called internal fraud, occurs when an individual within an organization exploits internal data for their own benefit. This type of fraud can be committed by a current or former employee, a vendor or contractor, or any other person with privileged access.
Insider fraud can take many forms, including receipt fraud, travel fraud, and payment fraud. Fraudsters might go after funds directly, but targets can also include confidential data or intellectual property. It can happen in any vertical, even ones not generally associated with fraud, such as charities. Common examples of insider fraud include:
- Exploiting access to accounts and systems to siphon funds or issue unauthorized payments.
- Embezzling or misappropriating funds to directly steal from the organization’s accounts.
- Leveraging private company information to manipulate stock purchases for personal financial gain.
- Stealing personal information, proprietary data, or intellectual property and using it to commit identity theft.
While some cases involve hacking into restricted files, it’s more common for the fraudster to have legitimate access to the information because of their job responsibilities, such as payment processing. That can also make insider fraud difficult to identify, as a person familiar with the organization’s workings will likely know the best ways to avoid detection.
There are three key factors that often factor into insider fraud:
- Motivation: The fraudster has pressing financial needs
- Opportunity: The fraudster has access to the necessary data
- Rationalization: The fraudster’s internal arguments to justify the crime
That said, insider fraud is not always committed by malicious actors with criminal intent. It can also result from human error or negligence.
