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Tips for avoiding accidental business fraud

On Behalf of | Oct 14, 2021 | Criminal Defense

It may seem odd to think that a business could accidentally participate in fraud, but it is more common than many people think. Often the source of the problem stems from mid-level employees who have enough authority to commit fraud, but not as much oversight as people higher up in the company.

These tips can help businesses avoid becoming unknowing participants in fraudulent activities.

How accidental fraud happens

Many companies from lenders to insurance companies have mid-level employees who are responsible for screening applicants. Most of these employees are honest and good at their jobs. But sometimes employees give in to the temptation to give someone a break, help out a friend or simply make an error in judgment. When this happens, customers seeking to commit fraud through the use of a business’s services may involve that company in their fraudulent activity without company leadership knowing.

Tips for avoiding accidental fraud

Internal controls are the key to avoiding this type of fraud. Companies must build redundancy into their systems so that it is difficult for a single employee to commit fraud or assist someone else with committing fraud without company leadership finding out. Additionally, it is helpful to build a company culture of trust and keep written policies and procedures that govern employee conduct up to date and refresh employees on them often.

A dishonest employee can ruin the reputation of a business. However, by taking steps to find and prevent employee fraud, businesses can avoid being unwitting participants in fraudulent activity.

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