The COVID-19 pandemic has fundamentally changed many aspects of our lives, from the way we work to how we live. And in doing so it’s given rise to an increase in fraud.

2020 is a year few of us are likely to forget in a hurry. Since the start of the year, the coronavirus pandemic has caused disruption not just in our personal lives, but across the business world.

As millions of people work from home because of social distancing, and with a looming recession caused by a slowdown in the economy, the pandemic has created the perfect storm for fraud, allowing criminals to take advantage of the ensuing anxiety and uncertainty.

According to data from Experian and the National Hunter Fraud Prevention Service, instances of fraud increased by 33% since April. And in the UK, fraud and cybercrime has risen by 400%, reports Action Fraud.

This fraud takes many forms, and many are old scams with new coats. We’ve come across increases in accounting or financial statement fraud, and we also predict there will be a noticeable increase in insolvency fraud and false claims. And, with employees working from home, the pandemic has led to an increase in the misappropriation and theft of company assets.

There’s also some new scenarios arising out of the COVID-19 outbreak, with millions of dollars already paid to fraudsters. There are cases of cheats filing fake claims to scam government coronavirus relief funds. And fake vendors selling personal protective products and medical equipment, which inevitably doesn’t arrive. There’s also fraudulent charities using phishing emails that mimic health agencies, soliciting donations to help fight COVID.


How has the pandemic created the perfect storm for fraud to take place? It’s best expressed in the “fraud triangle theory”, an auditing framework made up of three components that together explain the factors that can cause someone to commit fraud. They are:


Working remotely is new and unexpected for many businesses. Employees now have access to assets and information that allows them to commit and conceal fraud much more easily than they could sitting in an office because there’s less supervision and weakened internal control procedures.


With a slowdown in the global economy, a recession looming and businesses under pressure to cut costs, people’s jobs are at risk. In some cases, this gives people the personal justification they need to commit fraud. “I have to do this to support my family”. “My employer did not treat me well”. It is a thought process that enables people to maintain two conflicting and seemingly incompatible states: the ability to initiate or partake in unethical acts while maintaining a positive moral code. The types of crimes themselves may be familiar, but the form of rationalisation is likely to trend post-COVID toward personal entitlement and temporary need.


Completing the triangle is the pressure or incentive to commit fraud. People might be facing financial difficulties or potential unemployment. Ordinarily, they might never have contemplated fraud, but in these exceptional circumstances they might feel they have no other choice.


Around the world, law enforcement organisations and the courts are feeling the pinch of coronavirus. There’s a slowdown of the judicial system, enforcement agencies are reducing the scope of investigation work and there’s a lack of remote access to investigation files and physical evidence. So, detecting and counteracting these frauds is challenging in the current climate.

At Perun Consultants, we believe the first thing organisations can do is cultivate and maintain a positive ethical community where employees are more likely to frequently and subtly counteract dishonest rationalisations. It is crucial to establish a culture that supports accountability at all levels of the organisation, together with comprehensive anti-fraud training, codes of conduct and ethics programs.

When presented with the stressors and pressures of a fraud scenario, we often behave differently than expected – rationalisations can creep in rather subtly. If employees are being fostered to become more ethical thinkers and to unconsciously act ethically, the tone from the top must be the anchor.

When checking for fraud risks, a formal risk assessment is usually recommended since no system of internal controls can fully eliminate the risk of fraud. However, well designed and effective controls can deter most would-be fraudsters since they reduce the opportunity for fraud.

Perun is able to assist organisations in managing their fraud risks by conducting formal risk assessments to measure the factors that influence fraud and how susceptible an organisation is. Organisations that demonstrate consistency and predictability in their approach to managing unacceptable behaviours significantly reduce their risk. And with the pandemic showing no end in sight, and economic pressure mounting, it’s imperative businesses protect them-selves from these increasing new trends in fraud.