The COVID-19 Pandemic had and continues to have a shattering influence across the world, not simply on the health and wellbeing of individuals but on the economy globally.
These financial strains have led to a new wave of fraud in the workplace as the pandemic has proven a breeding ground for innovative and new techniques used to try and obtain money from individuals, businesses, and the public sector.
In this blog we will look at some of the types of fraud that have arisen during the pandemic. On top of this we will look how the pandemic has affected the private investigation sector but more importantly how the private investigator can help combat fraud.
Employee Fraud
In its 2020 Report, the Association of certified Fraud Examiners estimated that around 5% of all revenue generated by organisations every year is lost through employee fraud. This equates to about 3.5 trillion annually. A startling figure.
From an employment standpoint, covid 19 has caused a massive stir in traditional business models. Whether it be moving a workforce to home, changing shift patterns, or limiting staff on site, resources have been stretched to deal with the government guidelines itself and meeting operational and legal guidelines. All these changes are time consuming in their nature and that has opened the door to new fraud opportunities.
The most obvious type of fraud specific to the pandemic is the falsification of positive covid tests to obtain time off work. One of the most severe cases was in America where an Atlanta Native faces 3 years in prison and nearly $200,000 in fines after submitting a fake COVID-19 test to his employer. As a result, his employer — an unidentified Fortune 500 company shut down, causing a loss of more than $ $100,000, the department said. “The defendant caused unnecessary economic loss to his employer and distress to his co-workers and their families,” U.S. Attorney Byung J. “BJay” Pak said in a statement. “We will take quick action through the Georgia COVID-19 Task Force to put a stop to Coronavirus-related fraud schemes.” Though the fake positive test fraud numbers are relatively low it still highlights just how serious the damages can be for all parties involved.
Another more common type of fraud is Ghost Employee Fraud, this is Having a fake employee in the payroll records or prolonging the pay of an employee who has left the company. This type of payroll fraud can be carried out by individuals in the payroll department – signing over the false payslip to their own bank account. This action can expose a company to a risk of an HMRC investigation, as the ‘ghost’ payslip often has no deductions. This isn’t specific to the pandemic and has been a fraud technique for years however the increased pressures the pandemic has but on businesses makes it more likely to go undetected.
Employer Fraud
Ghost employee fraud can also be carried out by companies. Examples include embezzlement of amounts that are claimed to have been paid to employees, evasion of financial benefits for which staff members should be legally eligible, and other similar offences. The rise of Furlough fraud has also seen the use of ghost employee fraud as a method to gain Coronavirus-related government support for a non-existent or dismissed staff member.
Furlough fraud is the biggest challenge facing the government and some of the types of employer fraud include the following.
- Employer’s making a claim under the Scheme on behalf of an employee without the employee’s knowledge whilst they continue to work as normal.
- An employer placing an employee on furlough but making them continue to work as normal.
- An employer misrepresenting the hours an employee has worked to maximise the amount recoverable through the Scheme.
Impact on the Private Investigation Industry?
Fraud is on the rise and for us as investigators it would be natural to deduce that our services would be required more often. While that statement in itself is true, the supply line between our potential clients and us means that we aren’t being used half as much as we should be. Simply put, despite fraud being on the rise, detection is still relatively low and that is perhaps due to resources being stretched because of the Pandemic.
This extra time spent on resources and maintaining a functional business would naturally leave less time to firstly be aware of any fraud that may be occurring and furthermore restrict the ability to investigate said fraud. In many cases budgets could have been reduced and therefore where fraud may have been suspected and investigated before it is now being brushed under the carpet. This has had a knock-on effect and the private investigation industry aren’t seeing half as many cases as they should be when measured on scale with the rise of fraud as a whole.
How can a PI help?
If you believe an employee is committing theft or fraud from your company, we can implement a range of tactics to assist in an investigation, including covert equipment, surveillance, and undercover investigators. The evidence gathered can be used to support disciplinary action and court cases. Identifying an offender in your working environment can have a profound effect on your business and staff morale.
The wellbeing of employees is paramount to the running of any business and unfortunately, sickness is inevitable. However, when an employee attempts to defraud the company taking sick pay when they are in fact well enough to work it can cost the business financially and have a negative impact on other staff members.
We can offer surveillance and discreet covert investigations to ascertain if the employee is acting fraudulently. Our investigators will work closely with the business to ensure the company is not put in a position making them liable if the outcome is a legitimate sickness case