August 14, 2015
The Cost of Fraud in the Workplace
by Brad Barron
Fraud such as identity theft doesn't just devastate the individual victim but also hurts their employers -- which should provide protection.
Identity theft in the workplace and the expensive consequences are affecting more and more companies each year. One in three businesses were affected by data breaches last year, and the number of identity theft victims continues to grow. As the threat increases, it’s important to understand how identity theft happens, how it affects a company and its employees and what an employer can do to help.
How does identity theft happen?
Or better yet, how do thieves get information? Common ways include the following:
- A dishonest employer/employee stealing information from coworkers (97% of cases, reported by companies that were fraud victims and uncovered the responsible party, were inside jobs.)
- Hacking company databases or installing malware
- Phishing – sending fake emails or setting up unsolicited websites/pop-up windows to get information from unsuspecting victims
- Phone scams (40% of fraud complaints noted that the fraudsters contacted them via phone.)
- Going through the mail or trash
There are plenty of ways that a thief uses newfound treasures. A few examples are…
- Filing fraudulent tax returns to get the victims’ refunds
- Bypassing security questions to access bank accounts, etc.
- Getting healthcare through a victim’s insurance
- Opening lines of credit, obtaining loans, leases, etc.
- Selling the information to other thieves
How does identity theft affect the employee?
Employees who become victims of identity theft must deal with all kinds of consequences. They’ve lost their sense of safety and privacy and probably have significant financial losses. It all adds up to major stress and lots of work, which means employees are going to be heavily distracted at their jobs.
- More than one-third (36%) of victims said the identity theft incident caused them moderate to severe emotional distress.
- About one million employees miss work each day because of stress.
- 60% of employees said they have lower productivity at work because of stress.
Identity theft also brings major financial setbacks. Millions of victims are suffering from the billions of dollars lost to identity theft over the last couple years, and it doesn’t help that one in four workers already deal with major financial distress on a daily basis, whether they’re a victim or not.
How does identity theft affect the employer?
Identity theft hits every kind of business, robbing companies of their private information, revealing their private information and decreasing their levels of productivity.
- All different industry sectors were affected by data breaches in 2014: business (34%), education (15%), government/military (16%), medical/healthcare (26%) and financial/banking/credit (8.1%).
- The top types of fraud experienced by affected companies are theft of information (22%) and physical assets (28%).
- Fraud ends up costing companies three times more than what was initially stolen, with companies paying upwards of $3.08 for every dollar of fraud loss.
Fraud repercussions decrease employee productivity and eat away at company revenue. Unfortunately, every industry is vulnerable.
How can the employer help?
A good way for employers to keep their companies safe from the consequences of identity theft is to incorporate an identity theft prevention and recovery service into the employees’ benefits program. Features could include continual monitoring, assistance for addressing suspicious activity and resources that help with resolution.
Identity theft protection plans with 24/7 monitoring of credit activity and personal information will help reveal fraudulent activity before it causes significant damage. Likewise, a product that provides assistance and resources for the recovery process can help alleviate some of the stress that victimized employees feel, because they have professional guidance and support for tackling all of the necessary tasks.
All employers have a reason to consider what kind of protection and coverage is currently available for their employees. More and more companies are affected each year, and the health and financial costs should be enough to push employers toward getting a solution.