Employees that Commit Workplace Fraud

It’s hard to imagine a member of your team being purposefully dishonest, but more often than expected, fraud occurs in the workplace.  It is reported by U.S. companies that as much as 5% of yearly revenue is lost due to dishonest employees.  For an early stage company, this could mean a loss of tens of thousands of dollars.  For larger organizations, millions – annually.

While we may have an idea in our heads about what type of people would steal from us, it’s widely accepted in the investigative field that there are three types of employees: those that habitually scam organizations and maybe even break the law, whether or not they’ve been caught, those that have had a sudden change in personal circumstances,and, often, long-term employees who have become comfortable or who have taken note of a vulnerability over time and finally are exploiting it. In the case of the long-term employee, these people often go undetected for a long time as they’re smarter about their methods, stealing smaller amounts over an extended period.


Background checks these days are often geared in the favor of the job applicant, and we all know that people only list references that will say positive things about them.While credit and criminal history can be checked (depending on the position and jurisdiction), commercial tools and software platforms may lack the sophistication provided by a professional investigator in identifying patterns such as history of civil actions.

‘Professional’ fraudsters may specifically target companies that are perceived to be easy targets or that have a history of these types of incidents.  In some circumstances, these individuals can gain the trust of high-level leaders that they serve and create damage for the company and individual simultaneously.

Strong controls, Security Master Planning, a visible investigator, smart background checks and trained leadership teams can combat the work of fraud-seeking employees.  This can prevent issues ranging from physical theft of property or intellectual property to litigation.

Situationally Fraudulent Employees

As in any area of life, most people are honest.  However, an employee facing economic hardship may take subtle liberties at the cash register or when punching in and out to gain a few extra dollars.

When an employee struggles with major negative life issues such as gambling, substance abuse, financial problems or personal or familial medical problems, their employer may be the stable figure in their lives that they lean on for support.  When an employee feels desperate, they may take instead of ask in order to make ends meet.  This mindset can actualize into theft and fraud against their employer, even if the employee initially justifies their actions by thinking they will pay it back.

Employers are able to limit the odds of this type of fraud in their workplace by developing and maintaining good business practices and oversight, without being micromanagers.  If it is difficult for an employee to commit fraud, they will be less likely to do so.  While it may be hard to predict who will steal from the company, it is easier to prevent everyone from doing so from the top down.

Comfortable Employees

Any employee who has had access to an expense account can attest to the laxity they begin to feel over time spending the company’s money.  People are hardwired to test the limits on what they are able to get away with. Over time, the most likely employees to commit fraud are those that are trusted, long-term and senior-level.

It is important to establish and communicate policies to employees.  For some, the line may genuinely be gray, and thus, easy to cross.  With others, a feeling of ownership of the company that comes with long-term employment may enable an employee to feel entitled to things that are not rightfully theirs. Be wary of the long-term employee that doesn’t use their vacation time or won’t take more than a day or two off. The longer they are away from the workplace, the more likely their scam is uncovered.

It is important as leaders to work with experts that can balance company growth with protection. While most employees are good, honest and hard-working, we design systems to both keep good employees good, and deter and detect the bad apples.  Security consultants and investigators can help to develop controls that protect company’s interests and drive that 5% back to your bottom line.

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RAS did a fantastic of job of guiding CLC through the complicated decisions we had to make in order to strike just the right balance, promoting both employee safety and a welcoming work space for our staff and clients. Ryan was quick to respond to all of our questions and delivered exactly what was promised.

Leslie Starr Heimov
Executive Director, CLC