Holiday Season Hiring Brings Increased Fraud Risk

Identity Theft & Fraud Blogs

Written By ESR News Blog Editor Thomas Ahearn

Thanksgiving week signals the official start of the holiday season. Along with turkey, football, presents, and good cheer, the holiday season brings an increase in seasonal hiring. However, fraud experts interviewed for an article posted on InsuranceJournal.com warn that businesses skipping their usual due diligence background checks when hiring to quickly add workers for the holiday season face an increased risk of fraud. The article is available at http://www.insurancejournal.com/news/southcentral/2014/11/18/347427.htm.

In the article, two fraud experts – Bruce Dorris, Vice President and Program Director of the Association of Certified Fraud Examiners (ACFE), and Eric Feldman, Managing Director, Corporate Ethics and Compliance Programs for Affiliated Monitors – offer tips for businesses hiring seasonal workers. Both fraud experts agree that employers must protect themselves with background checks, training, and codes of ethical conduct to reduce fraud. They answered the following questions:

  • How serious is the fraud risk during the U.S. holiday shopping season? – Dorris says that according to the ACFE 2014 Report to the Nations on Occupational Fraud and Abuse organizations lose an estimated 5 percent of total revenues to fraud. Other ACFE research indicates fraud rises an estimated 20 percent during the holiday season. He adds that “high traffic and increased sales provide an even bigger opportunity” for fraud.
  • Many businesses increase staffing for the holidays. How does this affect their risk of fraud? – Feldman says that employers often “short-cut” normal hiring procedures during the holiday season due to the pressure to remain fully staffed. He says businesses should follow usual procedures to avoid fraud.
  • How important is it for companies to conduct background checks (as permitted by law), even for entry-level and temporary positions? Feldman explains that the first defense against hiring employees who may commit fraud is with “thorough employee screening” that includes  “criminal checks, complete reference checks, and even brief ethics tests.” This includes entry-level and temporary holiday positions.
  • Do seasonal employees need fraud training? – Dorris answers that with increased volume and crowds during the holiday season all employees “should be aware of fraud in the workplace” to be vigilant against fraud, know the warning signs of fraud, and have training in basic fraud awareness.
  • The holiday season is hectic and business is usually good – is it okay to “lighten up” on controls such as audits, management review and segregation of duties while things are so busy? – Feldman warns that the holiday season is not “the time to lighten up on internal controls” since even normally honest employees “can be tempted to engage in unethical behavior” if they see greater opportunities to commit fraud. He adds that s employers should “keep their guards up” through the holiday season.

Sponsored by the ACFE, International Fraud Awareness Week runs from November 16 to 22, 2014 and is global effort to minimize the impact of fraud by promoting fraud education, awareness, detection, and prevention. For more information about International Fraud Awareness Week – including resources, presentations, anti-fraud tools, and steps to combat fraud – please visit http://www.fraudweek.com/.

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