Types of Employee Fraud That Can Damage Your Business

Employee theft and fraud are prevalent issues for businesses and cost around $2.9 trillion in annual losses to global SMEs as well as large enterprises. Over 75% of employees steal at least once from their employer which puts financial strain on employers.

Therefore, many employers consider hiring private investigators to determine whether or not their workforce engages in fraudulent activities, as well as collect evidence to take appropriate action against wrong-doers.

Misuse of Business Assets

While many employees think nothing of using office supplies and assets for personal use, it can add up to significant losses for a company. For instance, employees that receive a monthly fuel allowance may take the company-maintained car on a recreational trip, or they may steal office stationery for personal use.

When working from home on laptops provided by the company, some employees may use the system to browse personal social media accounts or stream movies for entertainment from illegal or pirated websites that violate copyright laws. Aside from causing monetary and productivity losses, such activities may also result in lawsuits against the company.

However, private investigators can assist you in determining whether an employee is engaged in these illegal or unethical activities through comprehensive computer forensic investigations.

Stealing Cash from the Employer

While many businesses, particularly retail chain stores, are implementing strategies to go cashless due to its positive aspects, you may still need to keep hard cash in your store to manage day-to-day operations. However, some employees come up with creative schemes to steal cash. They may pocket funds without registering a sale or collude with a third party to record fraudulent refunds.

Increasing employee theft cases may indicate your organisation needs effective policies to build a strong culture where employees are accountable for their actions.

Do you have reasonable grounds to suspect your employees are hurting the company by stealing cash? Then it may be appropriate to consider hiring a PI to investigate the case.

Data Theft

Losing confidential business information to employee theft is another critical concern for businesses. Employees are obliged to protect intangible business assets such as trade secrets, product information that is yet to be launched, customer details, and other important data and refrain from sharing it with unauthorised parties.

There have been cases where disgruntled employees have inflicted uncontrollable damage to a business by leaking data after they were fired from the organisation due to workplace misconduct. However, it’s important to note that data breaches can also occur due to the careless behaviour of employees.

Businesses should, therefore, take precautionary measures to build a secure infrastructure for reducing the risk of data breaches online as well as in the office. Furthermore, employees should be well-aware that data theft incidents would result in appropriate disciplinary action.

In such cases, acquiring the services of a private investigator can be your best bet. These professionals can gather facts through surveillance, interviews, and forensic computing investigations so you can make an informed decision about the next steps based on evidence.

Workers’ Compensation Fraud

As per local and federal laws, businesses should provide a safe and secure working environment to employees. Workers compensation insurance is in place to protect employees and employers alike in the event of a workplace injury or illness.

However, employees may commit workers’ compensation fraud by lying about the incident or the extent of the injury in the following ways:

• Stage an injury to file a fake claim
• Claiming they got injured during work hours at the workplace even though the incident took place away from the workplace
• Exaggerating the severity of the injury
• Working elsewhere despite their disability claim

Professional investigators possess expertise in evaluating the legitimacy of these claims. Through a thorough and comprehensive enquiry process, investigators can establish critical timelines of events leading up to the alleged injury, whilst also conduct surveillance to verify the claimant’s capacity for work.

Kickbacks and Corruption

When you need to choose a vendor for procurement, you’d analyse vendor quotes and then opt for a supplier that offers quality items within your budget and respects deadlines. However, managerial employees may receive kickbacks from vendors to make a decision that personally benefits them.

For instance, such unethical vendors may offer cash payments or other incentives to your team to ensure they receive favourable treatment. Similarly, these vendors may invoice the business with inflated bills for sub-par products or services.

Since these kickbacks entice employees to make decisions that hurt the business, you should consider monitoring such transactions and management-level decisions to prevent corruption. A licenced Private Investigator can assist you in exposing these fraudulent activities.

Time Sheet Fraud

Employee time theft can significantly hurt a business’ bottom line. Companies that don’t incorporate the latest technology for tracking employee work hours are more likely to experience this type of theft.

Employees commit this fraud by asking colleagues to clock in on their behalf when they’re running late. They may spend work hours on personal activities or take extended breaks when in the office. Moreover, leaving the workplace early without the approval of a direct manager is another common type of employee theft.

To combat this type of employee fraud, you should implement timecard theft policies, raise awareness among employees, and make sure that managers are well-trained to identify potential time theft. However, hiring a PI to conduct a corporate investigation is the most effective way to expose fraud.

Cheque Forgery

With digital banking, companies can pay employee wages and make payments to vendors against procurement orders in a secure way. However, the risk of losing money to fake or forged cheques can still occur. An employee can forge signatures on cheques to transfer funds into their account. They may also tamper with a wage cheque to alter the name of the payee or the payable amount.

It’s possible to prevent this type of theft by monitoring transactions from the business account. You can activate SMS or email alerts to get real-time information when funds are transferred and contact your bank when suspicious transactions are detected. Moreover, business chequebooks shouldn’t be easily accessible to unauthorised people and must be kept in a secure space.

Do you want to get further information about how to investigate employee theft? Then you can read about our corporate or workplace theft investigation services.