How to Deal With Employee Fraud in the Workplace

Many business owners believe employee fraud “won’t happen to them.” Well, what if we told you this crime costs U.S. businesses $50 billion a year?

The truth is, workplace fraud comes in many types. These include property theft, asset misappropriation, insurance fraud, and more. Chances are, your business doesn’t have enough supervisor resources to stop them all.

The good news: discovering a fraud scheme in the workplace isn’t the end of the world. If this happens to you, here’s how you should handle it.

Stop the Fraudulent Activity

When you become aware of fraud, your priority is to put a stop to it right away. Mitigating an internal breach requires decisive action. Of course, the exact steps you take will depend on the crime you’re dealing with.

Let’s say one of your employees is embezzling company funds. Your first step should be to confiscate their work computer. This takes away their means of access and may help you learn how they’re carrying out the fraud.

Conduct an Investigation

Before accusing an employee of theft, you need to prove their guilt. The best way to do so is to appoint someone to conduct an investigation. That can be someone from the HR department or a private investigator.

The investigation must gather as much evidence as possible to substantiate your claims. Focus on corporate documents such as bank records and invoices. Finding witnesses can also be of crucial importance.

Meet With the Wrongdoer

Once you find proof of fraud in the workplace, have a closed-door meeting with the perpetrator. Make sure to have at least one witness present. Talk to your attorney beforehand to prevent claims of wrongful dismissal.

At the meeting, tell the wrongdoer what you know about their crime. Try to find out why whether they acted alone or not. Once they share all the key information, you can either fire them or allow them to resign.

Report the Fraud to Authorities

Depending on how the meeting goes, it can be tempting not to report the crime to authorities. For example, the wrongdoer may offer to return the stolen property. They may also be genuinely guilty for their actions.

Regardless, you should always report the fraud. If you don’t, the next business that falls victim to the wrongdoer may decide to charge you. Your inaction can also damage stakeholder trust and employee morale.

Determine the Cause of Fraud

Managing employee fraud is also about preventing future occurrences. For starters, figure out why the fraud occurred. Did the employee feel that the company unfairly compensated or wronged them?

You should also take action to prevent this from happening again. For instance, using P cards can reduce the risks of fraud by streamlining the buying process. Contact a P cards company to learn more about it.

This Is How to Deal With Employee Fraud

By having a plan of action for employee fraud, you can prepare for it before it occurs. Otherwise, you might become overpowered by emotion and lash out at the culprit. From a legal standpoint, this would be a disaster.

Want to know more about the many types of employee fraud? Keep checking out our Business section!