The Economic Downturn’s Effect on Fraud

Our largest economic downturn since the Great Depression has permeated all of our lives and continues to do so in many different ways. Small businesses have seen this evidence in many different ways, a rise in workplace fraud being one of them. A Wall Street Journal online article by Simona Covel from 2009 documented this trend.

Personal financial pressures felt by employees may lead them to capitalize on opportunities within your company for fraud. Because of the recession, job loss, or stock loss,  and other examples of personal financial pressures, are more prominent.

According to the Association of Certified Fraud Examiners, billing was most frequently used for fraudulent activities. In Covel’s article, it is considered best when you come across these types of activities to not tip-off the suspect until you have gathered significant evidence.  It is also important to consult your attorney. Build your case before confronting the suspect. The WSJ article interviews small business owners that never saw the confronted individual again and never had a chance to recoup losses or prosecute the individual.

Consider the environment your employees are living in, whether it be economy related or personal financial pressures, and consider how it might change their activities. Being aware of these environmental pressures will not only help you relate better to your employees, but may also save your company financial heartache or ruin.

http://online.wsj.com/article/SB123501158460619143.html

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