How to Become a Fraud Investigator

Fraud investigation is the research of intentional criminal deception and involves civil and criminal methods of examination.

Professional fraud investigators have a variety of job responsibilities in corporate or government-based institutions. Duties vary greatly and the skills required include: conducting independent research of claims, examining the evidence, interviewing victims, and questioning potential perpetrators.

Fraud investigators also research reported cases of credit card and insurance fraud. They interview victims of fraudulent electronic transactions and interact directly with complainants and law enforcement officials. Additionally, fraud investigators work in corporate environments and communicate with employers, witnesses, and complainants. Along with members of the criminal justice system, they serve and execute search warrants, conduct surveillance, collect evidence, and make statements under oath in courtroom testimonies. Fraud investigators also work with attorneys and prosecutors in consultative legal capacities.

How has fraudulent crime changed over the years? According to Duke University history professor Edward J. Balleisen, author of the book Fraud: An American History from Barnum to Madoff, the historical origins of fraud can be traced back to the early 19th century. It was then that the phrase “buyer beware” became a popular phrase amongst consumers in the United States and Balleisen’s book places modern-day fraud scandals in a long-term context.

With over $3.5 trillion U.S. dollars lost by businesses affected by fraudulent practices each year, professionals trained in modern-day fraud investigation are necessary for the overall financial health of individuals and organizations, as well as maintaining the societal and ethical integrity of a country’s economic and political systems.

Skills & Personality Traits of Successful Fraud Investigators

Fraud investigators must work independently and have precise written and verbal communication skills. Additionally, the qualifications of potential fraud investigators include the ability to conduct interviews, write legal reports, take statements, and collect, organize, document, and preserve evidence.

The ability to communicate in an ethical and objective manner is essential for fraud investigative professionals. Because fraud investigators are ombudspeople interacting with fraud victims, potential perpetrators, legal professionals, judicial government agencies, and law enforcement officials, objective communication skills are an essential professional skill.

Investigation of cases involving intentional deceit requires a specialized skill set. Below are some essential skills and personality traits of fraud investigators:

• A genuine interest in maintaining legal, financial, and ethical standards – Fraud investigators are tasked with helping individuals and organizations solve and maintain their social, financial, and ethical integrity.
• A degree in forensic accounting, criminal justice, or a related field – Professionals with an educational background in forensic accounting have an advantage in knowing the motives behind criminal behavior and how to prevent fraud from happening. People with professional legal knowledge use their skills to inform their investigative work.
• Previous military or law enforcement experience – Individuals apply previous experience with intelligence and investigation as well as their abilities to follow standard safety protocols with objective documentation.
• Knowledge of Internet-based crimes, legal and corporate investigation, and financial investigation – Fraud investigators use their cross-disciplinary knowledge to specialize their skills for specific professions in the aforementioned areas.
• Inquisitiveness – People who investigate fraud must be able to ask and formulate questions on the spot when investigating fraud claims.
• Persistence – Professionals investigating fraudulent claims must thoroughly investigate every lead they have related to their assigned case.
• Patience – fraud investigators spend multiple hours doing surveillance or questioning leads and have to expect that cases will not always resolve quickly or at all.
• Exceptional writing and speaking skills – Fraud investigators are responsible for determining legal and ethical fault and may be called upon as a witness in a criminal or civil trial, and therefore must be able to listen carefully, and speak clearly, precisely, and objectively.

Role Requirements for Fraud Investigators

The Association of Certified Fraud examiners lists four major career pathways for fraud investigators which are as follows:

• Accounting – Forensic accountants are trained to use investigative skills for litigation and other roles and ensure financial compliance and accurate record-keeping.
• Auditing – Auditors in fraud investigation conduct formal reviews of an individual’s or an organization’s financial records, security protocols, information systems, and performance audits.
• Governance, risk management, and compliance – The fastest growing sector of the fraud investigation career, professionals with this specialization are responsible for management structure, risk control, and regulatory compliance.
• Investigation – Divided into public and private sectors, fraud investigators in the public sector work for federal, state, or local law enforcement, while private investigators maintain independent practices, work in loss-prevention, or internal/external fraud analysis.

Other types of fraud investigation specialization involve insurance claims fraud, computer-based commerce fraud, identify theft, and civil and criminal investigations involving citizens or corporations.

The specialized pathways for fraud investigation include specific professional roles and duties:

• Interviewing people to gather information
• Collecting evidence to present in court or for a client
• Conducting surveillance
• Searching public or court records to check for criminal history
• Investigating information theft and computer crimes
• Verifying employment and income
• Researching claims to ensure compliance with insurance policies
• Preparing evidence for legal use
• Conducting background checks on prospective employees and financial professionals
• Investigating the business practices of external corporate partners

Steps to Becoming a Fraud Investigator

Here is one pathway to pursue a career in fraud investigation:

Step 1: Earn a bachelor’s degree in forensic accounting, criminal justice, or a related field (four years).

After graduating from high school, prospective fraud investigators can enroll in a degree program at a community college or university and study forensic accounting, criminal justice, criminology, social and political science, or other cross-disciplinary studies.

Courses in forensic accounting typically include instruction in dissecting financial statements, litigation support, investigative accounting, and fraud data analysis, among others. Courses in criminal justice typically include the philosophy of law, contemporary political philosophy, classical sociological theory, social problems and public policies, law and economics, neighborhood dynamics of crime, biopsychosocial criminology, computational data exploration, statistics, and psychology and the law.

Students in these programs are encouraged to seek opportunities for hands-on experience through internships or part-time work in order to gain a well-rounded educational experience and prepare themselves for a career in fraud investigation.

Step 2: Get some experience in the field (one to three years).

There is a wide variety of career, internship, and other hands-on opportunities available to aspiring fraud investigators with a degree in forensic accounting or related educational background.

Job opportunities can be found on the Association of Certified Fraud Examiners website. In order to qualify for certification, candidates must have some relevant professional experience in order to be able to apply and take the exam to become a Certified Fraud Examiner (CFE).

Step 3: Pursue certification through a professional organization (less than one year).

There are two main certifying organizations for fraud investigation professionals: the Association of Certified Fraud Examiners (ACFE) and the International Association of Special Investigations Units (IASIU).

The ACFE is the world’s largest anti-fraud professional group and offers a credentialing exam exclusively for its members to earn their Certified Fraud Examiner (CFE) credential.

Members of the IASIU abide by a code of ethics and have access to three certification programs for insurance fraud specialists: the Certified Insurance Fraud Investigator (CIFI) program, the Certified Insurance Fraud Analyst (CIFA) program, and the Certified Fraud Representative (CIFR) program.

Both organizations offer professional development, career listings, and annual conferences for their members to develop skills and widen professional networks.

Step 4: Pursue a master’s degree program and/or doctorate degree (two to four years, optional).

For those aspiring to pursue research and leadership opportunities, a graduate degree is typically necessary.

An example of one academic program is the University of West Virginia, which offers an online master’s of science degree in forensic and fraud examination and an online forensic and fraud accountant graduate certificate. Students in this program take courses in fraud examination, investigation, data analysis, criminology, and analytical techniques.

Master’s and doctoral candidates wishing to teach or earn higher positions can expect to attend seminars, conduct research, as well as complete oral or written exams in addition to their final master’s research project or PhD dissertation.

As a final note, fraud investigators in the U.S. should consider joining a professional organization such as the National Association of Fraud Investigators and the National Society of Professional Insurance Investigators. Both groups offer professional development opportunities such as networking, continuing education, and opportunities to attend conferences.