January 2019

How to Fight Employee Fraud So It Doesn't Hurt Your Business

4 minute read

Growing your business is exciting, but also scary. Amongst those fears? Losing control and exposing your business to employee fraud. It's understandable. Instances of reported fraud rose from 61 percent in 2012 to 84 percent in 2018, according to the Kroll Annual Global Fraud & Risk Report.1

While cyber-crime is the greatest risk, old-fashioned "theft of physical assets" is the third most significant threat with 27 percent of businesses surveyed reporting low-tech fraud incidents.

Workers with easy access to merchandise, cash, cheques or sensitive customer data don't need technology to commit fraud. Once you understand some of the more common methods, however, it can become easier to prevent.

3 Low-tech methods of employee fraud—and how to stop them

Stealing customer data. Employees can steal significant customer data, including credit card and Social Insurance Numbers, in office settings, retail environments and more. For instance, salesclerks can write down the number and security code on a customer's credit card and use the information to make purchases by phone or online. Office workers can steal customer data from printed files or even patient intake forms in a healthcare setting.

To discourage this type of employee fraud, keep payment processing equipment in sight of customers and/or fellow workers. Ensure that all customer records are behind lock and key, limiting access on a need-to-know basis.

Cheque fraud. Cheque fraud tactics can range from writing fraudulent cheques and forging signatures to complicated cases of procurement fraud where the employee sets up fake vendor accounts. Keep all cheques locked up, limiting access to one or two personnel, and always require two signatures. Review online bank statements frequently to look for unusual transactions.

Shifting away from cheque to digital payments is the only guaranteed way to eliminate paper cheque fraud within an organization. Streamline accounts payable and accounts receivable systems, simplify bookkeeping and save time by moving to a secure payment method through a trusted provider.

American Express provides solutions to receive payments and pay suppliers digitally, streamlining accounts payable and receivable while helping protect users from employee fraud.

Fraudulent expense reports. Dishonest salespeople and other employees who travel have been submitting fraudulent expense reports since the earliest days of business. From forging receipts to picking up dinner for additional guests, some employees consider a business trip a way to line their pockets at your expense.

First, be proactive about fraud by ensuring employees understanding your expense policy and code of conduct rules while they are on the road or entertaining clients or prospects. Then, be hyper-vigilant about enforcing those rules by tracking employee spending.

Embrace the digital age to fight low-tech fraud

The more you know about employee fraud, the better prepared you will be to fight it. And the more tools you leverage to show employees you are serious about theft, the less risk you will face. Even better, the same digital payment and billing systems that can help you eliminate centuries-old methods such as cheque fraud can also help you streamline operations, make bookkeeping reconciliation easier and better manage your cash flow.

Explore the American Express family of products, including an Amex Corporate Card and American Express vPayments® to fight fraud and streamline supplier payments.

1 https://www.kroll.com/en-us/intelligence-center/press-releases/businesses-report-all-time-high-levels-of-fraud