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Tips to Preventing Employee Fraud

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When it comes to protecting your business from fraud the first things that come to mind are the external threats: hackers, check fraud, email phishing, and fraud liability. Sadly, these aren’t the only security concerns that you need to monitor to protect your business. Keep an eye on internal fraud threats that may come from your own employees. Be aware of employee check fraud, false expense reimbursement, and payroll fraud when checking on internal fraud threats. Read the following five tips to avoid internal security concerns.

  1. Review the history of any new hires.

    When hiring new employees, especially ones that will handle payroll and company funds, be sure to do a thorough background check before deciding to officially hire them. According to a survey conducted by CareerBuilder, 56% of hiring managers caught lies on a candidate’s resume [1]. Check your candidate’s information by reviewing their:
    1. Federal and State Criminal Checks
    2. Credit Checks
    3. Social Security Number
    4. Motor Vehicle Report
    5. Education and Employment Verifications
  2. Encourage enrollment in direct deposit.

    Capitalize on convenience by having your employees enroll in direct deposit. Not only does it give them instant and easy access to their paycheck, it also alleviates the risk of payroll check fraud for your business.
  3. Keep a close eye on departments that have access to payroll and account information.

    Due to necessity, some departments may have more access to sensitive information than others. Be sure to check-in and monitor these employees in particular. The Association of Certified Fraud Examiners (ACFE) found that approximately 77% of fraud occurred from individuals in the following departments: accounting, operations, sales, executive/upper management, customer service, and purchasing or finance [2].


Five tips to Prevent Employee Fraud Graphic Study up on how to keep your business safe internally and externally


  1. Watch for signs that an employee might be committing internal fraud.

    Keeping an eye out for suspicious or weird behaviors from an employee(s) is one of the easiest steps you can take to prevent fraud. The following behaviors can indicate that an employee might be trying to take advantage of your business financially.
    • They work long and unusual hours, sometimes returning after work hours
    • They are oddly curious about your company’s payment system
    • They refuse to accept assistance from others
    • They abruptly resign or leave
    • They have a large number of voids and a low number of transactions
  2. Be prepared for fraud.

    Ensuring you equip your business with the right tools is half the battle against fraud. Be proactive and make sure your company is carrying these tools in your fraud prevention kit.
    • Positive Pay. This service will eliminate your exposure to check fraud, externally and internally! It helps prevent voided checks, checks with altered payee names, stale-dated checks, and counterfeited or duplicated checks.
    • Commercial Credit Card. Employees making purchases on behalf of the company is a necessary part of your business. Reduce the opportunity for company credit card abuse by using a commercial credit card. With a commercial credit card, you can control spending power employee-to-employee, regulate where purchases can be made, monitor spending companywide online, and be able to use the card with corporate, fleet and purchasing capabilities.

It’s stressful for business owners to combat fraud. Implement these tips to increase security and combat internal and external threats. Want more information? We’re here to help! Check out our fraud prevention solutions to help protect your business.



[1] Employers Reveal Biggest Resume Blunders in Annual CareerBuilder Survey, CareerBuilder
[2] 2018 Global Fraud Study, Association of Certified Fraud Examiners


The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its subsidiaries and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.