Why Employees Commit Workplace Fraud

I have stolen things from work. None of us are angels, right? When I was in college, I worked in my school library and I stole from it. Not money or supplies.

I stole books. As a young man, I was fascinated with books. I stole copies of The Art of War by Sun Tzu, The Prince by Niccolo Machiavelli and Hiroshima by John Hersey.

I learned about these books in my classes and had become obsessed with them. After I had pilfered these books, I had become regretful and guilty. So, I confessed to my mother that I had stolen from work.

She told me that I should return the money as soon as possible. Furthermore, she said that if I were outed as a thief at work I would be fired, stigmatized, and no one would trust me.

She had naturally assumed I was talking about money. When I had confessed that I had stolen some books, she looked at me like I was a damn fool and walked out of the room.

I often think fondly on the moment. At the time, I must have been 18 or 19. I am grateful for my mother’s advice.

No, I didn’t rob a bank. But as I got older and learned more about workplace fraud, I realized that large thefts often begin with small ones. Workplace fraud is an expensive problem.

It can threaten the employment of innocent coworkers. Additionally, if you understand the fraud triangle, you may be able to recognize its occurrence.

Workplace Fraud

Workplace fraud is using your insight, position, or influence to illegally misappropriate the resources of your employment for personal benefit.

Examples of workplace fraud include, but are not limited to, embezzlement, supply theft, data theft, expense account fraud, fake supplier fraud, and so on.

Businesses lose over $7 billion annually to workplace fraud. Over $130,000 is lost in the average workplace fraud scheme. About 22 percent of workplace fraud schemes resulted in at least $1 million in losses.

Most cases of fraud last at least 16 months. Lax workplace control standards were the cause of 50 percent of such incidents.

Half of workplace fraud schemes are uncovered by anonymous coworker tips. How do you recognize workplace fraud? It helps to understand the fraud triangle.

The Fraud Triangle

This is three factors that augment the likelihood of workplace fraud being committed. The fraud triangle is Pressure, Opportunity, and Rationalization.

Pressure is motivation to commit fraud, like outstanding debts, a costly divorce, or medical bills.
Opportunity is finding flaws in the workplace system to take advantage of. Rationalization is the ongoing mental justification to commit fraud and continue doing it.

This can include a sense of entitlement or believing that no one will notice.

Workplace Fraud Red Flags

Here are some warning signs of workplace fraud:

You Can’t Be a Bystander When it Comes to Workplace Fraud

Who wants to be a snitch? This is not about snitching, it’s about your livelihood. Imagine your boss is busted for embezzling $100,000.

Bad press notwithstanding, everyone connected to the embezzler becomes suspect to the higher-ups. Either you were in on it, were mind-blowingly ignorant, or, you knew about it and said nothing.

Why would management or your new supervisor want to keep you employed? It’s your job to be vigilant about workplace fraud. It always starts in small ways and in plain sight.

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This is a guest post by Dinks Finance.