Employee Fraud: Warning Signs

Employee fraud was a boom area even before the recession started.  ‘Targeted’ frauds, often backed by organised criminals, are also becoming more common. In these cases, an employee (often using a stolen identity) is ‘planted’ in an organisation with the express intention of carrying out a fraud.

A lack of resources means that police response to fraud is patchy, particularly outside London. When it comes to gathering evidence, the onus is likely to be on the employer.

According to CIFAS, the Credit Industry’s counter-fraud watchdog, warning signs of potential employee fraud include:

  • staff under stress without a high workload;
  • marked personality changes;
  • always working late;
  • reluctance to take holidays or to delegate work, especially when on holiday;
  • unexplained wealth or living beyond apparent means;
  • sudden change of lifestyle;
  • customer complaints of missing statements, unrecognised transactions;
  • new staff resigning quickly;
  • cosy relationships with suppliers/contractors;
  • suppliers/contractors who insist on dealing with just one individual;
  • rising costs with no explanation;
  • key employees having too much control or authority without audit checks;
  • employees with external business interests.

If you do suspect fraud, we recommend that you take legal advice immediately. Whilst your main aim will be to obtain evidence that will stand up in court, you should proceed with caution. There is a risk of being taken to an employment tribunal should your suspicions prove incorrect or you act in a way that breaches an employee’s employment law rights. In addition, the way you gather evidence or record personal data on employees must comply with the Human Rights Act and the Data Protection Act. Always carry out a full identity check on any new employee.

 Click here for advice on reducing the risk of employee fraud.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

Latest News

Consumer Protection Enhancement Law - Time to Get Ready Consumer Protection Enhancement Law - Time to Get Ready
Failure to Comply With Purchase Terms Proves Costly Failure to Comply With Purchase Terms Proves Costly
Read Your Insurance Policy! Read Your Insurance Policy!
Problems With Warranties on Business Sales Problems With Warranties on Business Sales
Conduct Costs Despite Court Win Conduct Costs Despite Court Win
Misrepresentation Invalidates Adjudicator Appointment Misrepresentation Invalidates Adjudicator Appointment
Misled Directors Earn Rights in Company Misled Directors Earn Rights in Company
Refusal to Mediate Justified, Rules Court Refusal to Mediate Justified, Rules Court
Terms of Engagement Determine Liability for Advice, Rules Court Terms of Engagement Determine Liability for Advice, Rules Court
Contract Wording Leads to $12.5 Million Payout Contract Wording Leads to $12.5 Million Payout