Experts call for culture change as staff fraud cases continue to rise
Organisations are most vulnerable to employee fraudsters at the recruitment stage, according to the latest report from the UK’s Fraud Prevention Service, CIFAS.
It said that deceitful attempts to gain access to sensitive data via the recruitment process accounted for more than 50 per cent of all subsequent internal fraud cases in 2013.
Overall employee fraud rose by 18 per cent in 2013 compared to the year before, but this is the first time since the founding of the Internal Fraud Database in 2006 that dishonest attempts to gain employment accounted for the majority of insider fraud cases.
Figures show that the most common reason for organisations to file a case for application fraud (40 per cent) was because potential employees had concealed unspent criminal convictions.
The number of fake job applications that are discovered at the hiring stage had increased by 70 per cent increase in 2013. But despite this, Mike Emmott, employment relations adviser at the CIPD, said it was even more important for employers to invest in comprehensive pre-employment checks now that competition for jobs had increased.
“The number of people faking qualifications, and offering the wrong information on their employment applications is quite remarkable and highlights the need for employers to be vigilant during the recruitment process,” he said.
However, the CIFAS report noted that it isn’t always possible to detect a potential staff swindler at the recruitment stage, and in fact, the average length of service an individual spent with a company before committing fraud was six and a half years.
The report calls for companies to implement secondary measures, including a strong anti-fraud culture, with a zero-tolerance stance, and a happy working environment to help maintain staff morale and avoid ‘emotional triggers’ that might tempt an employee to commit a crime.
Around 60 per cent of internal frauds reported to CIFAS in 2013 were identified because of more robust internal security precautions, controls and processes for monitoring the activities of staff.
Figures show that today’s organisations are more open to confronting this issue, and as the report stated, HR departments in particular are making more effort to identify and investigate employee fraud.
However, despite the positive actions taken by employers, Emmott expressed concern over the relatively low proportion of internal cases of fraud being discovered by staff.
“Just 11 per cent of cases of internal fraud have been brought to the fore by whistleblowers in the UK, compared to the 50 per cent of cases in the US,” he said.
Under existing legislation, whistleblowers in the US are offered complete anonymity, and in some cases financial compensation, for exposing workplace fraud.
“The problem we have in the UK is that we expect our whistleblowers to be heroes and quite often protection for these employees goes beyond the law,” Emmott added.
“We place too much weight on legal remedies to protect our employees and really it should come down to creating a culture of trust and openness to encourage whistleblowers to really believe their voice will be listened to and protected after the event,” he said.