What makes white-collar crime so tempting? One reason is that a person who steals from a business can rationalize that his or her theft will hardly put a dent in the CEO's handsome salary. In an episode of the television series "The Simpsons," Homer Simpson rationalizes committing insurance fraud by figuring that the only effect will be that his boss will have to go without buying an "ivory back-scratcher." Although white collar criminals might like to think that they're cheating only highly-compensated executives, these crimes can have a devastating ripple effect.
When a company suffers from fraud from any source, it must make up for it by raising costs, which ultimately means higher prices for consumers. It can also mean less pay for employees and even cutting jobs. The effect can continue to ripple when it comes to those employees or investors who now find themselves unable to pay off loans, and credit becomes harder to obtain. When stock fraud or insider trading scandals break out, like they did in the 1980s in the United States, it can cause investors to lose faith in the stock market. Scandals like Enron can also wipe out innocent employees' retirement accounts.
Obviously, this kind of crime can have an enormous impact on society. The exact toll it has, however, is hard to quantify, both because of the wide ripples and the dilemma of finding accurate statistics.
Numerous factors make white-collar crime statistics hard to come by. As we discussed earlier, no consensus exists on a definition, and people disagree on what counts as a white-collar crime. Even if there were a consensus, however, accurate statistics are difficult to gather because the crime goes unreported and unpunished so often. Enron and other publicized scandals, it seems, are only the tip of the proverbial iceberg.
Even if fraud is suspected, there are no bloody footprints, no DNA evidence, no eyewitnesses and no smoking gun. One can't conclusively declare as in the board game Clue, "Colonel Mustard, in the kitchen, with the revolver." White collar criminals may leave only complex paper trails that take time and skill to sift through. Now, with the growth of technology and the rise of Internet, white collar computer crime is more rampant, but also more difficult to solve. Local law enforcement teams often find themselves ill-equipped to track down the criminal. The FBI has admitted that arrest rates for white-collar crimes are significantly lower than that for other types of crime [source: Barnett].
Next, we'll look into the laws meant to prevent white-collar crime as well as how those who commit it are punished.