Fraud is the generic term usually applied to financial crimes committed with deceit or trickery. This can include tax fraud, where fabricated records are used to limit tax liability, as well as business fraud where fraudulent documents are used to steal from others. Fraud is a serious problem in business, the leading source of white collar theft.
Each year billions of dollars are lost in identity theft, scams, and other areas of fraud. The victims include small business owners, small and large charities, and senior citizens that are susceptible to these various scams and lies.
The IRS estimates losses to outright tax fraud to be around $2.3 Billion dollars annually, but the “tax gap” between what is owed to the government and what is collected is around $450 Billion annually, almost the entire pre-COVID-19 budget deficit. Much of that tax gap stems from under-reporting and other forms of tax evasion, but the impact on the budget is the same regardless of which criminal activity is involved.
Contrary to popular perception, white collar theft is not a victimless crime, and the idea that it is less severe than violent crime is not necessarily true. While the need for heightened security around white collar crime is less than those needing maximum security prisons, the financial impact of financial crimes may dwarf those of violent crimes. Given the quality of life and shortening of life caused by these financial stresses, the danger of financial crimes like fraud are probably understanded instead of overstated.
