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Fraudulent acts against businesses in Canada can result in substantial losses to those directly affected by the crime, but these crimes can also have an impact on all Canadians who rely on the products and services the businesses provide.

Globalization, technological advances and widespread use of technology, along with the increasing sophistication of certain criminal activities have meant that in Canada, as in many other countries, fraud has become a growing priority (Statistics Canada, 2006). Until now, official statistics on business fraud in Canada, collected through the Uniform Crime Reporting Survey, have been limited in that they only reflect incidents of fraud that come to the attention of police. Other data sources on business fraud are often limited in terms of their representativeness, their comparability across businesses or the scope of the information collected. For more information on these issues, please see A Feasibility Report on Improving the Measurement of Fraud inCanada, 2005 by Statistics Canada (2006).

To address some key gaps in data on business fraud in Canada, Statistics Canada conducted the Survey of Fraud Against Businesses (SFAB) for the first time in 2008. Focusing on businesses in the retail, banking and insurance industries, the SFAB seeks to provide data and information that will assist in building a standard, more comprehensive picture of the prevalence and characteristics of business fraud in Canada.

This report examines the first available data from this new national survey. It provides an overview of the findings from the SFAB, presenting national-level information for the retail, banking and the health and property insurance 1  sur industries on issues such as: the prevalence and types of fraud experienced, how businesses respond to incidents of fraud, the monetary and non-monetary costs of fraud and fraud detection and prevention practices.

Information from the SFAB is presented for individual business establishments and not for head offices or corporate head quarters. 2  For approximately 90% of the sample, information was collected from individual business establishments directly. For the remainder, information was collected from head offices representing multiple establishments, and then broken down to the level of single establishments.

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Defining fraud on the Survey of Fraud Against Businesses Survey

Fraud: An act whereby an individual or group of individuals by deceit, falsehood or other fraudulent means, defrauds the public or any person or business, of any property, money, valuable security, or service. For the purpose of the SFAB, fraud includes such acts committed against a business by employees or others. Direct theft where no deceit is involved is not considered fraud.

Types of fraud

Advance fee schemes: An offer of future benefit to the business that requires an 'upfront' fee and where the perpetrator has no intention of fulfilling the offer.

Asset misappropriation: The acquisition through fraudulent means of company assets, including monetary assets, cash, supplies or equipment, by company directors, others in positions of financial responsibility or employees for their own benefit; includes embezzlement by employees.

Counterfeit money: Incidents of fraud involving false bank notes or currency.

False billing: The receipt of bills for products or services that were misrepresented by the seller, or incidents where the products were either never ordered or received (e.g. paper, toner, business directories, etc.); also known as 'misleading representation'.

Financial misrepresentation: The alteration or presentation of company accounts so that they do not reflect the true value or financial activities of the company.

Fraudulent use of cheques: The intentional use of cheques with insufficient funds or the use of stolen, counterfeit or altered cheques; this includes cheques with forged signatures or false endorsements. Counterfeit cheques are those purporting to be issued by a legitimate account holder where the account holder did not write or authorize the cheque. Counterfeit cheques are often complete replicas of an authentic cheque using a variety of printing methods. Altered items are cheques, drafts or money orders with an altered date, payee or amount.

Fraudulent use of credit cards and bank/debit cards: The use of credit cards or bank/debit cards acquired through theft, theft of identity or personal information or through counterfeiting, to obtain cash, goods or services.

Insurance claim fraud: Incidents of insurance claims that have been investigated either internally or by police and have evidence of being false or inflated.

Mortgage fraud: The deliberate use of false, misleading or fraudulent information to secure a mortgage from a lender.

Other fraud as a result of identity theft/impersonation: All incidents, other than credit card, bank/debit card and cheque fraud, whereby stolen personal information and false documentation is used to impersonate another individual in order to obtain credit, access to funds or any other service.

Return fraud: The return of stolen merchandise or the return of merchandise using counterfeit receipts to obtain a monetary refund.

Worthless deposits (Automatic bank teller machines): Items deposited that are later returned due to empty envelopes.

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The sample for the Survey of Fraud Against Businesses

The Survey of Fraud Against Businesses (SFAB) collected data from selected establishments and head offices from the retail, banking and the health and property insurance industries. A representative sample of business establishments and head offices was randomly selected from those listed on Statistics Canada's Business Register, based on industry, establishment size and geography (province/territories).

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