How to stop fraud

The Madoff and Stanford cases may grab the headlines, but the temptation of fraud appears at every corporate level

Fraud Frenzy

Embezzlement accounts for 70 percent of fraud cases. "That's employee theft across the board" from C-level execs to administrative staff, Dorris explains. That's anything from fabricating vendors to charge payments to corporate credit card misuse, taking petty cash "down to stealing pencils, pens and notepaper."

Vendor fraud is also on the rise. Examiners are detecting fraud schemes in contract and procurement areas, where, for example, a vendor suddenly shows a marked increase in contracts over the previous year--especially low dollar amount, no-bid contracts, which may indicate kickbacks to employees.

Data fraud cases continue to concern employers, but now many employees who fear losing their jobs are using stolen client lists, marketing data or company secrets to leverage new jobs. Some 59 percent of employees who leave or are asked to leave a company are stealing company data, according to a report by the Ponemon Institute, and two-thirds of them admit to using their former company's confidential, sensitive or proprietary information for new employment.

But even without economic pressures and downsizing, data theft "certainly is an issue that has existed and continues to exist" on a daily basis, says Lisa Sotto, a partner and head of the privacy and information management practice at Hunton & Williams, which represents companies who have suffered a security breach, often by rogue employees.

Call center agents, for instance, are highly susceptible to breaches because they have easy access to customer data, and callers are willing to give up sensitive information, such as credit card numbers, Sotto says. What's more, healthcare and insurance providers often use Social Security numbers to authenticate a patient's identity on call center inquiries.

Tags fraud

Show Comments