The Dangers of Employee Theft and Fraud
Posted on: July 5, 2017 by Signature Insurance Group
A recent report from the US Retail Fraud Survey has shown some troubling findings: some businesses in the United States are losing up to $60 billion per year, and employee dishonesty has been identified as the number one cause of loss in these businesses. Many employers, particularly those that have been working with their employees for extended periods of time, hate to think that their employees would steal from them, but employee theft is unfortunately a common behavior in multiple industries. This behavior may not be able to be predicted, but with smart security measures, you can reduce your risk of employee theft. We recommend insuring your business with a Management Liability insurance policy, but you can protect your business before it gets to that point by understanding the main types of employee dishonesty, which we will expand upon in the coming weeks.
The Small Business Chronicle noted that there are five common types of employee theft, and four of them can be grouped under the category of direct theft. These four types of employee theft are:
- Cash Theft. As its name implies, this type of theft, most commonly seen in retail businesses, involves the theft of money and can be done in multiple ways. It does not just involve employees physically taking money out of the cash register; it also includes overcharging customers and keeping the difference for themselves.
- Supply Theft. This type of theft entails taking company property without permission. Some employees choose to take a series of smaller items – such as pens or paper – which add up over time, while others go after larger items such as furniture or computers. If this is allowed to continue undisturbed, it can heavily cost your company in replacing the supplies.
- Merchandise Theft. This type of theft occurs when employees swipe merchandise that is meant for the customer, whether it is done during the workday or during the distribution process. Like supply theft, this can easily add up over time and cost your business a great deal of money.
- Information Theft. One of the less tangible forms of employee theft, this particular action occurs when employees forcibly obtain access to confidential information – such as customer lists – in order to use it for their benefit. In addition to potentially costing your business, this breach of confidentiality can cause distrust in your business.
There is one type of employee theft that was not mentioned in the previous section, and while this final category does not involve any physical theft, it is no less damaging to your company. In addition to taking money away from your business and negatively affecting your finances, employee fraud can irreparably damage your business’s reputation. Some of the prevalent types of employee fraud include:
- Payroll Fraud. In this action, employees falsely claim compensation for work they have not done. This includes claiming reimbursement for non-work purposes and falsifying their time sheets.
- Bribery and Corruption. Some employees have been found to accept bribes or other benefits from third parties in exchange for an advantage.
- Asset Misappropriation. One of the most common types of employee fraud, this includes any activity that makes use of the company’s assets for personal gain. In addition to the physical thefts mentioned above, this also includes workers’ compensation fraud, paycheck forgery, and insurance fraud.
About Signature Insurance Group
Signature Insurance Group has been working since 1969 to provide comprehensive insurance solutions to individuals and businesses across the United States. We offer a range of insurance products and services in risk management, employee benefits, business insurance, and personal insurance, and we pride ourselves on our commitment to creating “Signature Relationships” with our clients where we commit to providing the best, most comprehensive service possible. To learn more about our goods and services, contact us today at (800) 464-3606.