4 out of 10 cases of fraud go unreported to law enforcement

fraud cases

4 out of 10 cases of fraud go unreported to law enforcement

fraud casesAccording to a study, companies suffer losses amounting to 5% of their revenue due to fraud. With this significant percentage in losses, what do companies do to these perpetrators of fraud, who are generally their own employees?

Apparently, not all cases of fraud are reported by companies to law enforcement. As many as 4 out of 10 cases of fraud go unreported. Companies have revealed several reasons behind their decision to sweep those cases under the rug.

Of the reasons mentioned, the three recurring ones are that the company believes: (1) the crime can adequately be dealt with through internal disciplinary actions; (2) the issue can be resolved through a payment of compensation by the perpetrator to the company, and; (3) the issue can potentially damage the company’s reputation.

Dilemma in handling fraud case

It is understandable that protecting reputation and recovering losses are the focus in case resolution. However, failing to report fraud incidents has the potential to result in recurrent events in the future, including the possibility of occurring in other firms.

In some cases, the company even imposes light sanctions on perpetrators, such as temporarily suspending them, asking them to resign, and urging them to compensate.

On the other side, by failing to report the crime, the perpetrator is free to enter and leave other businesses without being charged. They may exploit this leeway to conduct fraud in other firms using other modus.

The importance of reference check

This will certainly reduce the company’s level of trust in prospective employees and become a challenge in conducting recruitment. The candidate’s CV may look attractive, but who knows if he has committed fraud in the company before.

Therefore, companies need to carry out employment background screening. Throughout the procedure, several checks will be performed, such as checking educational records, credit checks, criminal checks, job history, and reference checks

Reference check aims to dig deeper information about candidates by interviewing references (supervisors or/and colleagues in previous companies). The information extracted is in the form of the candidate’s skills, qualifications, and behaviour while still working at the company.

From the reference check, information can also be obtained if the candidate has committed fraud or other violations which will not be verified from the criminal check – if the candidate’s fraudulent act has never been reported to law enforcement.

Integrity Asia has been trusted by our clients from various business backgrounds for more than two decades to conduct employment background screening and provide comprehensive analytical reports. By having vital candidate information, your company will be better equipped to make the right hiring decisions.

For more detailed information on employment background screening and other compliance services, contact us today.


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