White collar crime was first introduced as an idea in 1939. It was a response to the concerns that law enforcement typically has with street crime, but not with crime that happens when people are in occupations that have a higher status. Any crime affects someone, even if it is believed to be victimless. That’s the trap of a white collar crime.
Fraud and other forms of white collar crime cost US organizations more than $400 billion every year.
White Collar Crime
Most people will look at cases like Enron as a good example of white collar crime, or perhaps Bernie Madoff, but crime happens virtually every day on some level. Employees might right an unauthorized check to themselves or to their spouse. Business funds might be used for personal expenses, like paying for soccer gear. Many people who commit white collar crime justify their actions by saying that they’ll pay the money back, but almost no one ever does.
- Median business losses caused by executives are 16 times those of their employees.
- The most costly abuses tend to occur not in large organizations, but in companies with less than 100 employees.
- The average company loses more than $9 per day per employee to fraud and abuse.
- The average company in the United States loses about 6% of its total annual revenue to white collar crime that is committed by its own employees.
- Losses caused by managers are 4x the amount, on average, of those caused by employees.
- Men commit nearly 75% of the offenses and cost the company about 4x the amount in white collar crime costs than women who commit a crime.
- The typical perpetrator is a college-educated white male who is working in some form of real estate.
With $400 billion at stake in the United States alone, the costs of white collar crime are enormous. Although it tends to occur in four and five figure amounts at a local level, these crimes add up over time because they are so often overlooked. Many people can get away with these crimes for years because there is a certain trust that is placed with an employee, their reputation, and their experience. Controls become lax and there ends up being no accountability or oversight. When that happens, it becomes very easy to steal a little bit, month after month, until it adds up to a massive amount. Even though these crimes are prosecuted, it isn’t jail time that is usually handed out. Probation and restitution are the most likely outcome.
How Prevalent Is White Collar Crime Right Now?
- For every 100,000 people in the United States, there are 5,317 arrests that are directly related to white collar crime.
- Of those arrests, the number that are related to property crime: 635.5.
- Embezzlement is one of the most rare forms of white collar crime, accounting for just 6.5 arrests per 100,000 people.
- White collar crime accounts for approximately4% of the incidents reported to the FBI.
- Writing bad checks, if included in white collar crime stats, would double the amount of crime that is reported.
- Individual victims are the most common targets of white collar crime, accounting for nearly 75% of the total reported incidents.
- White collar criminals are 7 times more likely to target the government than they are to target a religious organization.
- The rarest form of white collar crime that is reported or investigated: bribery, accounting for less than 1% of all incidents.
White collar crime might not be taken very seriously, but it should be. Every time someone gets away with one of these crimes, it gives them confidence to do it again. They’ll keep doing it until they believe that they will be caught or they’re so brazen that they steal an enormous amount of money that can only be attributed to them. Because there is such a lack of oversight, it is very common for a white collar crime to go undetected forever if the criminal only commits one or two acts and then stops. What’s worse is the fact that most money is never recovered, even when restitution is ordered. Only property crime that steals actual merchandise tends to have a good chance of recovery.
Is White Collar Crime Getting Worse?
- In August 2014, it was reported that there were 512 total white collar prosecutions that occurred in the United States.
- The 512 prosecutions was an 8.6% drop in the total number of incidents from the month before.
- On a year to year comparison with August 2013, the 512 incidents are 6.2% lower.
- When compared with prosecution rates from 5 years ago, the 512 incidents are 12.6% lower than what occurred in August 2009.
- Prosecution rates for white collar crime tends to spike in April every year and then recede into the Summer months.
- With the exception of April 2011 and April 2010, which saw months of more than 1,000 prosecutions, white collar crime rates have remained historically steady throughout the last decade.
- Outside of the FBI, who investigates 35% of white collar crime incidents, the IRS, DHS, and SecServ round out the top 5 investigative agencies.
White collar crime has been moving away from stealing money from companies to stealing money from people. The most frequently cited charge that leads a prosecution attempt is aggravated identity theft. This charge accounts for 18.6% of the total charges that were filed within the last month. Mail fraud or conspiracy charges to commit offenses that defraud the country are also popular charges that are filed. In total, however, bank fraud and wire fraud are still the most popular white collar offenses that are investigated.
Will You Be Affected By White Collar Crime?
- It is estimated that 1 out of every 4 households will become the victim of a white collar crime at some point.
- A majority of people in a recent survey – 70% – believed that white collar crime contributed to the Great Recession of 2008-2009.
- More than 88% of white collar crime incidents are never reported to law enforcement agencies, although about half of all incidents are reported to someone, such as a supervisor.
- 17% of individual respondents in this survey reported experiencing at least one form of white collar crime.
- When white collar crime is committed against someone in the same household, the police reporting rate is just 11.7%.
Why has there been a shift toward white collar crime? There are three basic reasons: 1) the returns are much higher than any other form of crime, including organized crime; 2) most people don’t report these crimes when they occur, preferring to deal with it on their own; 3) victims feel like they are to blame because they weren’t “smart” enough to notice a scam that took their money or property. This is why it is so important to make sure that white collar crime is reported. Here’s a hidden statistic for you to consider: if only 11% of white collar crime is reported to a law enforcement agency and the official statistics note 400 crimes prosecuted per month, then there are 3,600 white collar crimes every month that aren’t addressed in any fashion.
Why Do We Need To Act Today?
- The average amount that is taken during an armed robbery of a bank: $3,137.
- In comparison, the average computer-based white collar crime may bring in a loss that is as high as $500k.
- In the UK, a 2000 report placed the total economic cost of white collar crime at £13.8 billion a year.
- In Canada, one white collar crime ring was making about $100k per day. When caught and convicted, they were given an $80k fine and no jail time, or less than a day’s wages.
- It can take more than 2 years for white collar crime charges to make their way through the justice system.
- More than 50,000 people die on the job every year because of occupational hazards that are known by an employer, but not addressed.
- 3 new prosecution loopholes have developed over the past decade that limit restitution: the deferred prosecution agreement, the non0prosecution agreement, and pleading guilty as a closet entity or as a defunct entity that has nothing to lose.
When there is nothing really to lose and everything to gain, the temptation to commit a white collar crime grows very strong indeed. When fines, deferred prosecutions, and even agreements not to prosecute in return for some sort of favor are the ruling methods of the day to stop these crimes, the only people who come out as a loser are the victims. They’re left with nothing while the government and the criminal gets to keep a good portion of the cash. That’s what is wrong with the system and that is what needs to change. Until it does, white collar crime may continue to stay at pretty level rates, but will still cost the economy billions.