The past decades has witnessed significant advancements in the electronic resources. As a result, new technologies such as the World Wide Web, personal computers, webpages, cell phones, and handheld devices have changed the manner, in which the crimes are committed. Specifically, this progress has resulted in an increase in the number of methods that the criminals can use for committing particular crimes. In addition, these technological advancements have also increased the locations, from which the criminals can implement their activities (Payne 2012). An example of this impact is the case of the property crimes, which no longer requires a face-to-face interaction of the victim and the offender for the crime to occur. Initially, the property crimes were characterized by offenders snatching the victims purses or breaking into their homes. In the present day, the offenders can engage in criminal activities against people living miles away at the comfort of their homes via their personal computers. The crimes committed using the information and communication technologies (ICTs) are posing a significant challenge to the law enforcement agencies due to their extremely technical nature, which causes the need for the law enforcement agencies to organize trainings in the computer forensics in order to detect and investigate such crimes effectively (Gottschalk 2010). With the technological advances, the prevalence of the ICT-related crimes is likely to increase. In this respect, this paper explores how ICT is being used in committing the white-collar crimes.
White Collar Crime in South Africa
White-collar crime is a form of a non-violent crime commonly committed in the business world. The concept of a white-collar crime was first introduced by Edwin Sutherland in 1939, who considered it a crime that involves betraying the trust by a person being in a position of trust (Zagaris 2010). In addition, Edwin Sutherland argues that the white-collar crimes are usually committed by the respectable individuals of high social status when performing their occupational duties. Moreover, the white-collar crime is perceived to be a bigger threat to society as compared to the street crime since it encourages distrust and scorn of the fundamental social institutions. The fraud and white-collar crime are used interchangeably. According to Zagaris (2010), the white-collar crime is a deliberate crime committed with the main objective of depriving another individual of the property rights irrespective of whether the actions benefit the offender or not.
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It is also imperative to have an understanding of the key features associated with the white-collar crime. First, the white-collar crime does not involve any physical contact between the victim and offender. The white-collar crime is also considered an indirect type of theft; the perpetrators justify their actions since it is victimless and indirect and, thus, may be considered acceptable. In addition, when committing the offense, the offenders are at work whereas the victims are not aware of the occurrence of the offense. Another characteristic of the white-collar crime is a low visibility and high complexity. Payne (2012) also outlined another feature of the white-collar crime, which is no use of force against property or an individual. Moreover, Payne profiled the white-collar criminals and reported that they did not socialize with the conventional criminals, were not delinquent peer groups, and were not poor. Furthermore, the majority of the white-collar criminals are respected individuals in the community and at work and are mostly well off. Most white-collar crimes are linked to the efforts undertaken by the white-collar criminals in attaining and sustaining a middle-class lifestyle. The white-collar crime has also been caused by frustrations with the bureaucracies; as a result, the fraud and embezzlements provide avenues for revenging against the system (Gottschalk 2010). The corporate modeling has also been associated with the white-collar crime in the sense that most organizations require their staff to betray, steal, cheat, and lie to the inspectors, competitors, and customers. As a result, the moral ground of such companies is lost; consequently, the employees adopting the same worldview as the corporation have (Payne 2012).
In South Africa, the white-collar crime is a significant issue of concern among the organizations since a considerable percentage of employees engages in the fraudulent activities and schemes. Globally, the fraud is prevalent; however, in South Africa, it is more obvious with at least four companies out of five being victims to fraud (Zagaris 2010). In addition, the South African organizations are experiencing an average of 11 fraud incidents annually, which is higher as compared to eight incidents experienced by their global counterparts (Naicker 2006). About 33 percent of local fraud incidents are discovered by chance with 53% of the discovered frauds being committed by personnel in the top and mid-management positions (Naicker 2006). Other forms of fraud that are prevalent in South Africa include sleaze, enticement, and financial falsification, especially the asset misappropriations performed by the company employees. The openings, reasons, and nullification of the ethical concerns associated with the white-collar crime in South Africa have been aggravated by the historical circumstance. As Naicker (2006) explains, particular historical practices in the country have played a crucial role in providing a fundamentally favorable setting for committing the white-collar crime. For instance, the tax evasion culture in South Africa is rampant; the phenomenon is justified on the grounds that most citizens considered the government illegitimate. Some South Africans believed that the tax evasion is not a crime because of the inequitable tax system. In addition, South Africa is characterized by people having the need of safeguarding what they already have, which is significantly contributing to an increase in the prevalence of the white-collar crimes; the uncertain employees, who are concerned about being dismissed, are likely to safeguard their nest even with the illegal methods (Naicker 2006).
Use of ICT in Perpetuating the White Collar Crime
ICT-related fraud is a subtype of a computer crime that makes use of the electronic resources in either misrepresenting the information or presenting the fraudulent information as a method of deceiving the others. According to the Association of Certified Fraud Examiners (2007), fraudulent activities that make use of the electronic resources are primarily an extension of the current fraudulent activities although they utilize a novel medium. The white-collar crimes perpetrated using ICT are the similar to the conventional white-collar crimes with the only difference being that the ICT-related frauds are committed on a digital platform, which involves using a computer or any other type of an electronic resource (Brancik 2007). ICT can be used in various ways to commit white-collar crimes discussed in the following paragraphs.
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Phishing e-mails are one of the ways, through which ICTs can be used in committing the white-collar crime. Phishing e-mails refer to sending e-mails claiming to be from ones bank or financial institutions although they are actually from fraudsters (Wells 2009). This type of e-mails persuade an end-user to clink on a link that redirects one to a fake website that is usually identical to the website of ones bank; after this step the end users are prompted to update or verify their personal security information. A successful fraud will imply that the end-user will reveal his/her banking and personal security details. Phishing e-mails do not address the recipients by name since they are forwarded to numerous people in the hope that a few will respond. The main purpose of this type of e-mail is tricking the end-user to reveal their banking and confidential information (Wells 2009). Apart from phishing e-mails, Trojans can also be sent together with e-mails containing the attachments, pages, or files to be opened, which can covertly install a software on the users computer for monitoring his/her online activity including the keys entered with the keyboard. The fraudsters are often alerted when a debit/credit card information is being entered. Other types of the email fraud include the so-called Nigerian email fraud and the additional income-email swindle, which are popular worldwide including South Africa (Association of Certified Fraud Examiners 2007).
The second method, through which ICT is used in committing the white-collar crime, is through the false invoicing schemes, which entail employees to generate false payment through the submission of fraudulent invoice for the services/products that would not be rendered or delivered. In order to commit these schemes, a fraudster should create a false invoice. The computers come in handy when developing a fictitious invoice. For instance, a staff member might make use of the desktop publishing applications, printers, scanners, downloaded images, and other computer tools for producing the falsified invoices (Association of Certified Fraud Examiners 2007). One of the most prevalent form of false invoicing scheme in South Africa and worldwide involves using the shell companies, which are businesses with no physical presence except the mailing address, no staff, and which produce little economic value. Under this fraud, a fraudster is likely to provide a fraudulent invoice from a non-existent company to the victim for the services or products that would not be delivered. In this respect, the technological advancements have made it relatively easy for the employees to create shell companies that appear legitimate. For registering a fictitious company, an employee can acquire a fax and phone number from a Voice over Internet Protocol (VoIP) provider, establish a corporate e-mail account, as well as launch a website for the illegitimate company; consequently, all these features enhance the credibility of the shell organization. In addition, the false invoicing schemes are prevalent in an organization, in which the approvals for requisitions, receipts, and payments for goods or services are done by one employee. The computers enable employees to have their falsified invoice approved in various ways such as using the stolen account of a supervisor for approving the payment for the unauthorized services (Brancik 2007).
The expense reimbursement fraud is another form of the white-collar crime facilitated by ICTs. It is characterized by employees providing falsified information on their business expenses, which leads to overcompensation through exaggerated expense compensations. Various types of expense reimbursement fraud exist depending on the methods that an employee uses in falsifying the expense information, as well as the type of the fraudulent expenses (Wells 2009). They include the multiple reimbursements, fictitious expenses, overstated expenses, and mischaracterized expenses. The multiple reimbursements involve the perpetrator being compensated at least twice for the same expenditure. The fictitious expense fraud involves the fraudster seeking compensation for the inexistent expenses. The overstated expense fraud involves fraudsters inflating legitimate expenditures in order to have the bloated payments. The mischaracterized expenses involve the fraudster falsifying the expenditure and seeking compensation for the non-business (personal) expenditure. Various ICTs can be utilized in falsified invoicing frauds for producing the falsified receipts, as well as approving a falsified expense. In addition, several websites exist that can be used in generating the customized receipts (Brancik 2007).
ICTs can also be used in committing the payroll fraud, which involves generating the false documents so that the victim companies can make a falsified disbursement. In the payroll frauds, perpetrators change the payroll records, which results in the victim organization making the excess payroll payments. The most prevalent forms of payroll fraud include the ghost employees and falsifying the reported working hours. Owing to the fact that the organizations use software applications in managing their payroll, they are vulnerable to manipulation by the fraudulent employees (Association of Certified Fraud Examiners 2007).
ICTs are also being used in committing the skimming crimes, which involve stealing cash that is yet to be documented in an accounting system. According to Wells (2009), skimming takes place prior to documenting the receipt of the cash in the accounting records. As a result, it is also referred to as the off-book fraud, and is most prevalent in the accounts receivable and sales. The sales skimming involves an employee selling the products or services and collecting the payment from the customer although he or she refrains from recording the sale. In other words, the employee opts to pocket the funds obtained from the customer rather than submitting the money to the company. On the other hand, the account receivables skimming is somewhat difficult to hide as compared to the sales skimming since the payments to the accounts receivable are foreseen. In such a case, the perpetrators of this crime must focus on hiding the skimmed account receivables using some techniques such as the destruction of the transaction data, changing the account statements, lapping, and forcing the balances. In all the cases, the fraudsters use the organizations accounting software in concealing the committed fraud (Association of Certified Fraud Examiners 2007). For instance, the stolen funds could be transferred between customers through modifying the customer accounts, as well as transaction information in the database. In addition, the computer-savvy fraudsters can modify the programming algorithm underpinning the reproduction process, which allows them to hide any evidence associated with their crime without the need to change the transaction information. For instance, the manual ledge transactions can be used for transferring money between the accounts while, at the same time, reprogram the system in order to ensure that the manual transactions are not present in the companys monthly reports. Some perpetrators opt to steal the account statements of customers in order to make sure that the customers are unaware of any modifications in their accounts. The interceptions of customer account statements can also be done by changing the address of the customer in the companys billing system. In most cases, the perpetrators modify the addresses of customers in the billing system either the ones they can access or the undeliverable addresses in order to ensure that the statements are usually returned to the person committing the fraud (Brancik 2007).
The advances in technology are likely to result in the increase in ICT-related white-collar crimes. ICTs have provided a new platform, through which the white-collar crimes can be committed. In South Africa, the white-collar crime is rampant owing to a significant proportion of employees engaging in the fraudulent acts. In addition, ICTs have facilitated the commission of various white-collar crimes, especially using the phishing emails, falsified invoicing schemes, expense reimbursement fraud, payroll fraud, and skimming crimes. Essentially, the conventional white-collar crimes have been adapted to make use of ICTs. Moreover, the ICT accessibility has increased the relative ease, with which these white-collar crimes are committed.