Although offenses similar to what is referred to as white-collar crime have been around for centuries, it is likely that white-collar crime will become even more prevalent in the future than it is now or was in the past. Social and technological changes have made white-collar crime opportunities more available to a broader range of people than ever before. The important changes include (a) a rise in white-collar– type jobs, (b) the growth in state largesse, (c) an increase in trust relationships, (d) economic globalization, (e) the revolution in financial services, and (f) the rise of the Internet as a means of communication and business.
In modern postindustrial economies, more people have access to the tools of white-collar crime because they work in offices with forms and files and computers. These paper and electronic documents can be manipulated and altered so as to create a false impression of reality and permit employees to have illegal access to financial and other resources. In addition, more and more white-collar employees find themselves in jobs that are somehow connected to banking or financial services. The potential to engage in fraud is therefore great.
Opportunities to engage in fraud have also been expanded by the growth in programs associated with the welfare state, including Social Security, Medicare, and Medicaid, as well as a host of other less well-known programs such as the Federal Crop Insurance Program. All of these programs distribute enormous amounts of money to literally millions of applicants annually. They all depend on written materials and all are open to the possibility of fraudulent applications.
There is another change in the social organization of work and the economy that has increased opportunities for white-collar crime—the rise in trust relationships involving agents and principals. A trust relationship is one in which someone (called the principal) depends on someone else (called the agent) to manage assets or provide specialized services. For example, contributors to a pension fund are in a trust relationship with the pension fund managers, in that the contributors have to trust that the managers will manage the fund’s assets in a financially prudent manner. Similarly, someone who goes to a doctor is in a trust relationship with the doctor in that the person has to trust that the doctor will treat him or her according to what is in the person’s best medical interests. In the modern world, people increasingly find themselves in trust relationships in which they have to depend on others to do things for them that they cannot do for themselves. Trust relationships raise two main problems for the people who must rely on them. First, it is often difficult for principals to monitor and evaluate agents because of the complexity or hidden nature of the services that agents provide. In effect, principals often do not know whether agents really are doing the right thing for them. Second, agents have their own financial interests that may conflict with those of the principals whom they are supposed to be serving. Taken together, these two features of trust relationships mean that agents often have the motivation and means to take advantage of others.
The increasing number and complexity of political-economic ties that cross national borders have been a boon to white-collar criminals. This globalization of the economy has made it easier for potential offenders to contact victims, orchestrate complex criminal fraud schemes, and avoid detection and punishment by governments. Companies can be set up in one place to victimize individuals, businesses, and governments in other places. For example, some foreign companies have attempted to take advantage of changes in trade regulations in the United States that benefited North American manufacturers. These new regulations followed the passage of the North American Free Trade Agreement (NAFTA). To take advantage of the new regulations, foreign companies would mislabel their products as being manufactured in North America. Opportunities to engage in these sorts of frauds are plentiful today, because most global business transactions are not conducted via face-to-face meetings. Rather, they are conducted by means of telephone, fax, email, and other forms of electronic exchange. All of these impersonal modes of communication create abundant opportunities for fraud and deception.
Since the 1980s, the financial services sector of many national economies, including that of the United States, has exploded in size and democratized in scope. Insurance, consumer credit, mutual funds, and other securities, once available only to the wealthy, are now offered to middle- and lower-income individuals. Vast amounts of money flow between individuals and institutions in electronic funds transfers. The temptation and opportunity to engage in fraud are ever present.
Many, if not all, of the social and economic developments outlined above have been made possible as a result of technological changes. The effects of the emergence of the personal computer, network servers, and the Internet as the standard means of information storage, manipulation, and communication can hardly be overstated. Money and information flow faster now than ever before. More and more transactions take place anonymously rather than through face-to-face contact. In this environment, opportunities to engage in fraud and deception abound, and white-collar crime flourishes.