Employee theft is a crime that costs U.S. businesses an estimated $50 billion each year, according to Statistic Brain. More commonly known as embezzlement, it is the crime of an employee taking the personal property of the employer, which was entrusted to that employee. Employees steal for a variety of reasons, such as feeling that they have been wronged by their employer, or that they are “owed” by the employer, as a form of retaliation or because an opportunity presents itself. The loss can create major financial repercussions for businesses. Clearly expressing company policy regarding employee theft and repercussions are a primary step to prevention.
Stealing Cash or Supplies
Cash is one of the most common assets stolen from an employer. It is readily accessible in cash registers, safes and other locations to which employees may have access. Employees also commonly steal supplies to sell or to use at home. This may include office supplies like pens, paper or computers. In restaurants, employees may steal food, condiments or dishware. Even if the value of the cash or supplies stolen is relatively low, a continued volume over time can create significant loss.
When an employee devises a scheme to steal or misuse company services or resources, such as inventory or cash, it is known as asset misappropriation. Asset misappropriation is the most common type of fraud that occurs within small businesses, according to the Association of Certified Fraud Examiners.
Another type of employee theft is check forging, occurring when an employee writes to himself, a company check or an electronic payment. According to a study published by the Association of Financial Professionals, 71 percent of businesses experienced actual or attempted check fraud in 2015.
Check fraud can occur in a variety of forms, such as:
- Forgery — When a check is signed without authorization or when endorsing a check not payable to the endorser.
- Washing — Using chemicals to remove certain information from a check.
- Theft — Stealing checks to use for fraudulent purposes.
- Check Kiting — Gaining access to funds in an account before the bank collects the funds from another.
- Paper Hanging — Knowingly writing a check on a closed account.
- Counterfeiting — Illegally printing checks with information from the victim’s account.
Avoiding the use of signature stamps and by separating check processing responsibilities to multiple employees, employers are able to lessen the opportunity for embezzlement.
Abusing Company Credit Accounts
Many companies provide employees with company credit accounts to use for business purposes, such as purchasing inventory or supplies. However, when an employee uses a company credit account to pay for expenses for personal gain, directly or indirectly, it is considered theft. By making the theft amounts small and frequent, the employee is able to continue stealing, unnoticed for a longer period of time.
By enabling credit card limits, alerts and tracking systems, smaller thefts can be discovered before they become substantially damaging.
Receiving Company Services for Free
Theft of services is often done by employees for family and friends. By providing unregulated services or discounts to others, or failing to report services provided, the employee is stealing supplies, time and labor. While an employee may not steal company services to be malicious, the act can still have a negative impact on the business, especially when it is done on a regular basis.
It is important for business owners to be clear from the start that stealing products and services will not be tolerated. Explicitly explain in the employee handbook that the misuse of company services will result in prompt dismissal from job duties.
Exploiting Workers’ Compensation
Workers’ compensation acts as a safety net for employees who become injured on the job. A workers’ compensation policy will typically cover an employee’s medical bills and lost wages while out of work. Unfortunately, some workers take advantage of this service and exploit workers’ compensation. Claim-related fraud occurs when a worker falsely claims a work-related illness or injury to try to receive workers’ compensation insurance benefits. Being injured outside the workplace but claiming that the injury was work related, or exaggerating the severity of an illness or injury in an attempt to receive greater benefits constitutes fraud.
Contact Surveillance Experts Today
Employee theft can have a major financial impact on businesses. In an Annual Retail Theft Survey based on data collected from 27 retail organizations that employ 1.7 million people, 3.7 percent of employees were caught stealing from their employers, resulting in an average expense of $671 per incident.
Employee theft affects companies of all sizes and in all sectors; by having proper measures in place you protect your business from theft and fraud. For more information about the different types of employee theft, prevention or how a theft and fraud investigation can help, contact the experts at American Protection Group today.