White Collar Crime is Still Prevalent: Here’s How to Protect Your Organization

By Kim Ferenchak

Just like clothing styles, some white-collar crimes are back in fashion. In fact, they are so popular that they cost the American economy an estimated $426 billion annually, according to the U.S. Department of Justice.

While it can be hard to prosecute these bad actors, companies can take steps to protect themselves by knowing what to look for and how to prevent it.

Social engineering fraud

Also known as voluntary release of funds, this is when an unsuspecting person is tricked into forwarding funds to a criminal, usually through a fake email that they receive at work.

Simply changing the company culture can guard against this popular form of email fraud. Establish a company culture of social engineering awareness with regular phishing exercises, followed by training for individuals who fail the test. Establish universal Multi-Factor Authentication and End-Point Detection.

When vetting a vendor, establish a Buyer Beware culture by searching the internet for copycat websites and call the organization to be sure they are legitimate. Establish a contractually based relationship prior to paying any invoice. Exercise heightened caution with online-only vendors as fraudsters can easily create copycat or other websites that look real.

Employee dishonesty

Employee dishonesty is likely one of the oldest forms of white-collar crime. It is when employees steal from a company, usually in small amounts over a long period of time, so the theft goes unnoticed.

However, companies can prevent this age-old method of embezzlement by doing background checks on employees and potential new hires. Separate the duties of those reconciling bank statements from those writing checks and depositing checks. This is critical to preventing fraud, as two employees need to cooperate in the fraud, which is less likely.

Requiring countersignatures on all checks or checks over a certain amount is another preventative measure.

If you suspect an employee is stealing, remove them from duties that provide access to funds and call your insurance broker immediately, as coverage typically ceases when someone not involved in potential fraud becomes aware.

Forgery/check washing

Though many methods of payment have been created in recent years that replace physical checks, they haven’t gone away entirely. Therefore, forging checks is still prevalent.

In the modern version, the fraudster gains access to a completed check and erases everything except the signature, rewrites the check and cashes it.

Prevent this from happening by using a positive pay system provided by your bank, though most banks charge a fee for this service.

Purchase checks that can be voided if a chemical is applied and sign checks with indelible gel ink so it’s harder to erase.

Finally, drop checks directly at the post office and pick up your mail promptly.

Act fast

Crime losses are complex, be prepared in case your business becomes a target.

• Call your insurance broker as soon as you suspect a crime has occurred.
• Be prepared to complete a Proof of Loss.
• Know your policies and the conditions of coverage, such as call-back procedures.
• Know critical policy definitions, such as who is an employee. (Most policies do not include independent contractors unless endorsed.)

Make sure your coverage is sufficient to protect your organization.

For more information, visit our Property & Casualty page or contact me below to evaluate your existing policies and explore your options.