White Collar Crime: The Influence of Societal Essay

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White Collar Crime: The Influence of Societal Changes on Criminal Opportunities and the Nature of Crimes of Fraud

The process of globalization, coupled with the advent of the information age has had a significant influence on the nature of crime. For instance, the complexity and diversity of white collar crime has surpassed that of traditional street crime by far and it continues to cost the United States billions every year. Introduced by Edwin Sutherland in 1939, the term white collar crime refers to unethical or illegal acts committed by individuals or organizations, often during the course of legitimate occupational activities by persons of high social status and respectability, usually for organizational or personal gain (Friedrich, 2010 p. 6). In particular, fraud, which involves obtaining of another person's property through deception, is the most common type of white collar crime. The main distinguishing factors between fraud and traditional street crime is that in fraud, the victim is often unaware that a crime is in progress, it involves respectable members of a society and it is based on the element of trickery, which relies on the gullibility, greed, or kindness of the victims.

Albanese (2005, p.6) explains that burglary, robbery and theft were the most popular crimes in the 20st century, but fraud is fast becoming the most prevalent form of crime in the 21st century due to the rapid changes in information technology and the global economy. This implies that the numerous types of fraud that are present today - namely cheque fraud, credit card fraud, identity theft, pyramid and ponzi schemes, investment fraud and home improvement and home ownership fraud - can be attributed to changes in the wider society. Copes and Vieraitis (2007, p.124) assert that crimes of fraud are on the rise, and with the emerging opportunities for economic crime, the trend is expected to continue. This text evaluates how societal changes have influenced criminal opportunities and the nature of crimes of fraud. It also examines some of the challenges that are involved in regulating this type of crime.

Ways in which crimes of fraud have been influenced by changes in the wider society

Technological changes

Cash and cheques were the most popular forms of payment for most of the 20th century. However, technological changes have made debit and credit cards more wide spread. As a result, people are carrying less cash around, making traditional burglary and theft less attractive. Copes and Vieraitis (2007, p.125) also explain that technology facilitates skimming, stealing consumer and employee databases, and insider trading. For instance, Martha Stewart, a media celebrity and the founder of Martha Stewart Living Omnimedia was able to use insider information to establish that ImClone's share price was about to drop, and she sold her shares amounting to $230, 000 a day before the FDA announced that one of ImClone's drugs been disapproved. She was found guilty of securities fraud and sentenced to prison.

The rise of social media and worldwide access to the internet

The rise of social media and smart phone use has also increased the rate of identity theft. People continue to post all forms of personal information on social platforms such as twitter, Facebook, and instagram, making it easy for fraudsters to steal personal information. As demonstrated in the video 'Scammed - CBC Identity Theft'(2006), with information such as the name, date of birth and address, offenders easily manipulate the victims bank balances, financial accounts, credit cards and loans. Copes and Vieraitis (2007 p. 125) explain that the internet has made it easy to trick customers into divulging personal information and to purchase such information from websites. As a result, 37% of fraud complaints received by the Federal Trade Commission are for identity theft and by 2006; it had become the most prevalent form of fraud in the U.S. (Copes and Vieraitis, 2007 p.125).

The growing culture of impatience and the need for instant gratification

The increase in pyramid and ponzi schemes can be attributed to a growing culture of impatience and the need for instant gratification. Shover and Hobbs (2003, p.204) interview fraudulent telemarketers, who state that they commit fraud because they are able to make money quickly and that they do not have to deal with restrictive responsibilities. Furthermore, they view the victims as deserving of what befalls them because they are "greedy, ignorant and incapable and it is only a matter of time before they throw away their money on something impossible" (Shover and Hobbs, 2003 p. 206). Thus, fraudsters have been able to take advantage of people's impatience to come up with get rich seminars and schemes that defraud them of billions of dollars.

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Bernard Madoff, a former chairman of the Nasqad stock market and a highly respected investment manager in New York City, ran a ponzi scheme that cost gullible victims more than $65 billion (Friedrich, 2010 p.51). The video 'Earl Jones in Trust -- CBC Fifth Estate'(2010) further explains how naive investors who want to make quick money continue to fall prey to fraud offenders like Earl Jones, who are able to smell profit in impatience.

Global business practices

The integration of world economies, and the establishment of global markets, has made the globe a small place of activity, which has enabled fraud offenders to thrive. Globalization makes companies focus on areas where they have a strategic advantage and as they expand and enter new markets, they are exposed to fraud. As globalization increases inequality around the globe, fraudsters are able to get into organized crime and exploit illicit markets

(Friedrich, 2010 p. 3). The global reach of the internet has also widened the scope of potential victims.

Movement

Albanese (2005 p. 8) explains that the growth of the internet has made the movement of property easier because it facilitates wireless transactions and the conversion of property to cash and cash to property. Consequently, the rate of crimes of fraud has increased because organized criminals are able to resell counterfeit goods to get money for other collaterals, such as drugs. This type of fraud provides a larger profit motive, making it more self supporting than conventional crime, a factor that contributes significantly to the discovery of more complex forms of fraud.

Challenges involved in regulating crimes of fraud

A high percentage of white collar crime is not reported or identified officially compared to conventional crime, making it more difficult to measure and control (Friedrich, 2010, p.35). For example, crimes of fraud against a business remain unreported because they are considered embarrassing to the affected business and they might have negative repercussions such as loss of both consumer and investor confidence. Moreover, sometimes fraud investigators overestimate the amount of fraud. Individual victims tend to under-report crimes of fraud because they participated voluntarily and they are embarrassed to admit that they were deceived. Friedrich (2010, p.33) further explains that they often have a sense of futility about the response of the police and they are unaware of special fraud units that have been set up to fight this type of crime. In contrast to traditional street crime, fewer time and resources are also dedicated to regulating crimes of fraud due to the complexity of the technology that is usually involved.

The complexity and diversity of the nature of white collar crime increases conceptual confusion and makes the formation of testable hypotheses difficult (Friedrich, 2010 p. 24). A Crime of fraud also involves large organizations, many individuals that occupy different positions in these organizations, and complicated transactions carried out over a long period of time. This makes it hard for researchers and criminologists to comprehend the different aspects involved. Compared to conventional street offenders, fraud offenders are less accessible and less open to providing details about the crimes they commit because most are highly respected in the society, which interferes with research and regulation. For example Benson (1985, p. 248) interviewed ten offenders convicted for various forms of fraud. Of the ten, seven claimed that they were innocent of any crime and they had either been set up by associates or wrongly convicted. Moreover, the tendency of the society to blame the victims rather than the offenders is also a challenge in controlling crimes of fraud particularly because it facilitates underreporting and enables fraud offenders to thrive.

Conclusion

Criminal opportunities and the nature of crime are influenced by changes in the wider society. Technological changes have shifted offenders' focus from traditional theft that targeted cash and cheques to high tech methods that target debit and credit cards. More and more people are also divulging personal information on social media platforms, facilitating its use in numerous crimes of fraud. Furthermore, the impatience and need for instant gratification has made people increasingly gullible and greedy, which promotes both ponzi and pyramid schemes, despite numerous exposes. The establishment of a global market and the ease of conversion of property to cash has also encouraged organized crime, increased the number of potential victims, and provided a larger profit motive for victims of fraud. Regulation efforts are….....

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