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Employee fraud

Sometimes, the employee commits fraud against the organisation they are working for. To prevent it, the company should set up a work code and rules. If they find any irregularities, they need to initiate an investigation and depending on the seriousness of the act; they can dismiss the employee. 

However, before determining the punishment, the company should identify the magnitude and relevance of such lawsuits. Then, they should be in a position to prove the "improper conduct" of the worker. 

Some employees use their position to gain financial favours, and this is categorised as occupational fraud. For example, payroll fraud occurs when a worker receives a larger paycheck than determined by the company's HR. Many small businesses are vulnerable to such scamswhere they put faith in the employee and cannot detect it. 

Other examples of cheating at workplaces are - unrecorded vacations, stealing assets, unauthorised payment cards, fake bills (travel or medical) and others. 

The Labour courts give many provisions to the workers like if the workers lack honesty and if they have done relevant damage to the firm, it should be proved before they are punished for their actions. 

Therefore, it is important to provide legitimate evidence against their actions to proceed with a termination. 

But if an employer conducts an investigation and goes beyond the legal constraints, in that case, the proof obtained through various means could be declared invalid, or the firm can be made liable to pay damages for not following the employment agreement terms. 

Different Methods of Workplace Frauds

Buddy Clocking - One of the methods is buddy clocking, where the worker's attendance is punched by someone else. It may happen the worker is not present, but someone else is punching for them early and out late. 

The firm can prevent it by using a time tracking method where they use fingerprints and facial recognition to ensure the worker's physical presence.

Ghost Employee – Some firms pay for workers who do not work there. In such cases, the records of employees who left the firm are not deleted, and they are paid every month. The firm should audit records and check for duplicate data. Also, check the records of non-contractual paychecks.

The Employee Gets a Higher Pay Rate – Sometimes, errors in software can lead to higher paycheck for some employees, or some fraudsters change the basic payment settings to get higher rates. To avoid it, the firm should install password protected systems. 

Change In Working Hours – Employee can modify their work hours to get paid for overtime. The firm should set up clear rules for punching in and out and sync it with the payroll.

Fake Reimbursement– Some employee reimbursement for expenses that did not occur and such losses can be prevented by determining clear acceptable spending policies. 

Bogus Commission – Some salespersons seek higher commissions from their employers for inflated reports. Such losses can be avoided by double-checking sales records or tracking suspicious figures.

Date Published: Feb 08, 2022

Types of fraud

A-Z of fraud

To help understand which fraud you've been affected by, we've categorised them into an alphabetical list.

What is fraud and cyber crime?

Cybercrimes can be of two types. First, it can be cyber dependent, where the fraudsters use online devices to convince the victim to accept their offers.

Advance fee fraud

If you are trying to get a loan for a house or a car, they ask to meet the provider to get the financing arrangement and pay the finder's fee in advance.

Corporate fraud

Corporate frauds can be complicated, committed either by the firm or an individual. Nevertheless, it mostly involves cheating where the employee or the firm.

Individual fraud

There are many types of individual frauds related to advance fees, investments, insurance brokers, bogus tradespeople, Ponzi schemes, pension liberation.

Online fraud

Hence the number of cases of online fraud is increasing each year, and most such cases include – account takeover, direct frauds, or scams related domain names.

Identity fraud and identity theft

The criminal uses the stolen identity of another person living or deceased to conduct unlawful activities like obtaining goods or services in another's name.
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