Intermountain PI Podcast | Ep. 18 | October 8, 2019 | 6 Private Investigator Tips to Prevent Fraud in Business
Years ago I worked for a guy whose form of case management was writing notes on the back of manilla folders. In fact, he once told me, “Go do surveillance on that lady. You know, the one with the red car.” He became visibly upset when I couldn’t remember who he was talking about.
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PREVENTING FRAUD IN SMALL BUSINESS
Let’s talk about 6 private investigator tips to prevent fraud in business. First, let’s consider a few statistics. When it comes to theft in small businesses, employees are responsible about 58% of the time. Shoplifters account for about 35%. In other words, employees are more likely to steal from you than customers. In fact, a recent study suggested that 75% of employees have stolen from their employer at least once. Men are more likely to steal than woman. Moreover, it takes about two years before a fraud is detected.
Whether your employee is a high school graduate or a college graduate doesn’t seem to matter. They both account for about 34% of thefts in the workplace. On the other hand, employees with graduate degrees only account for 11% of thefts but they typically steal five times more. By the way, these statistics come from the Association of Certified Fraud Examiners.
This begs the question why? Why do employees steal? Lots of reason, really. Greed, for starters. Then there’s financial problems and unexpected bills. Of course, addictions, such as drugs, gambling and alcohol can be a factor. Sometimes they just steal because of opportunity. For example, due to weak financial controls or bad cash management procedures.
In the final analysis, your employees can be your greatest asset or your greatest sources of risk. With this in mind, consider these 6 private investigator tips to prevent fraud in business
1. PRE-EMPLOYMENT BACKGROUND CHECK
A background check looks at criminal history, sex offender status, credit report, driving records, education, previous jobs and references. A background check can cost anywhere from $30 to $300 or more depending on what you want to check. It won’t stop someone from stealing, but it may stop you from hiring a bad risk.
2. ACCOUNTING AND BOOKKEEPING
Another key point, don’t allow the same employee to do accounts receivable and accounts payable. In fact, don’t allow the same employee to do the accounting and bookkeeping. Furthermore, employees who handle company finances shouldn’t operate in isolation. Institute a regular, unplanned audit by a third party. Additionally, make sure the same employee doesn’t open the mail and post the checks. Again, those tasks should be done by two different employees. Finally, keep track of who your vendors and employees are. Employees often issue checks to fake vendor accounts or fake employee, and then redirect the money to themselves.
3. SECURITY CAMERAS
Equally important are today’s advanced security cameras. They’re digital, 4K, possess low light capabilities and can record to the cloud. As a matter of fact, you can even log in and watch from your home. Make sure your employees and customers are aware of the security cameras. Not only may they serve as a deterrent, but also provide tangible proof of a crime.
4. KEEP EMPLOYEE RECORDS UP TO DATE
You’ll thank me later for this one. Make sure you have a current photo, phone number, home address and vehicle information on your employees. In the event that you need to conduct a workers’ compensation claim investigation, current information will be critical.
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5. WHEN IT COMES TO THEFT, BE WARY OF EMPLOYEES
For example, be wary of hard working employees that never take a vacation. Not to mention, employees that come in early, stay late or appear to be living beyond their means. Especially, if they’ve been with you a long time. Unfortunately, it’s always the last people you’d suspect.
6. WITH WORKERS’ COMP CLAIMS, BE WARY OF EMPLOYEES
Finally, be wary of employees filing fraudulent workers’ compensation claims. Especially if they were injured on a Friday afternoon or Monday morning. These claimants are often involved in outdoor sports on the weekends. They may try to claim a sports injury as occurring at work. Other employees have part-time, labor-intensive businesses on the side like building decks.. Still, others are often getting ready to retire or leave for another job Also, statistically, the newer the employee, the more likely the claim is fraudulent.
These are all Red Flags that may indicate Workers Comp fraud. You’re probably thinking, that’s why I have insurance…so I don’t have to worry about these things. If you want to keep your insurance costs down, have a safe workplace and maintain your company productivity… you need to be proactive.
Until next time, this is Utah Private Investigator Scott Fulmer reminding you the game…is afoot!
UTAH PRIVATE INVESTIGATOR SCOTT FULMER HOSTS THE INTERMOUNTAIN PI PODCAST. HE IS THE PRINCIPAL AT INTERMOUNTAIN PI, A UTAH PRIVATE INVESTIGATION FIRM. SCOTT HAS WORKED FOR STATE AND FEDERAL GOVERNMENT AND THE PRIVATE SECTOR. HE SERVED IN THE U.S. ARMY WITH THE 101ST AIRBORNE AND 2ND ARMORED DIVISIONS. HE IS A DECORATED COMBAT VETERAN OF THE 1990-91 GULF WAR. LATER, HE EARNED A DEGREE IN CRIMINAL JUSTICE FROM THE UNIVERSITY OF TEXAS AT SAN ANTONIO.
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