Forestalling the next epidemic of white-collar crime

Authors: Peter Grabosky (Australian National University) & Neal Shover (University of Tennessee)

Publication: Criminology & Public Policy

Year: 2010

Focus Area: Prevention, Policy

Relevance: Fraud prevention policy depends both on quality research and on the translation of that research into practical policy proposals.

Summary: This article provides both commentary and concise summary of recent research and policy proposals related to fraud.  It is the concluding editorial review for a publication’s volume centered on white-collar crime.  Fraud prevention policy options are outlined into three possible categories:

  1. Decreasing the potential targets (in both number of victims and money lost): Previous attempts to reduce vulnerability and “lure” through financial education is approved by the authors, but they note that “gullibility may be deeply engrained in the human behavioral repertoire. It supports a massive global gambling industry” (p. 642).
  2. Increasing credible external oversight (by governments or regulating agencies): Given the increasing trans-nationality of fraud, oversight institutions must be global as well as local in scope.
  3. Increasing effective internal oversight or self-restraint: There is little evidence that self-regulation is effective, and the authors are skeptical about the efficacy of increasing people’s self-restraint.  The article outlines ways in which corporate officials could potentially contribute to successful internal oversight and foster positive public perception: by (1) altering policies to better protect shareholders and investors (rather than corporate officials), (2) spend money on research into illegal action that harms outsiders (rather than the firm), and (3) reform the treatment of whistleblowers.

Successful legislation depends upon the political and economic climate, such as crises that mobilize the public, or the gradual work of incremental reform.

The authors disagree with previous articles by noting that creating policy proposals is not difficult, though seeing them successfully implemented is.   The article urges scholars to consider both how “proposed policies might be put in place and obstacles to implementation” (p. 648).

Author Abstract: Crime-as-choice theory is useful not only for organizing thinking about the causes of white-collar crime epidemics, but also for drawing attention to potentially promising ways of reducing the odds of recurrence. Three target areas for policy initiatives stand out: (1) reducing the supply of lure, (2) increasing prevailing estimates of the credibility of external oversight, and (3) increasing the use of effective systems of internal oversight and self-restraint. Effective policies aimed at one or more of these promise to reduce both the supply of white-collar criminal opportunities and the size of the pool of individuals and organizations tempted, if not predisposed, to exploit them.

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