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How Background Checks Actually Stop Fraud

According to a recent report from the American Institute of Certified Fraud Examiners, employers lose five percent of their gross sales to fraud. The report goes on to reveal that median fraud losses approximate $150,000 and that it takes 18 months to discover that a trusted employee is stealing from you. Some studies indicate that 75 percent of employees steal once, while 50 percent steal frequently. Athird of all bankruptcies are estimated to be the result of employee fraud.

What exactly are you doing to stop it?

One of the most critical anti-fraud measures that any organization can take is to make sure that individuals with a questionable past are never hired in the first place. It’s up to each and every employer to perform adequate due diligence on all job candidates, especially when it comes to those who will have any access to cash receipts and disbursements.

Background checks are one of the most cost-effective and valuable tools to prevent those who have been charged or convicted of a financial crime from eyeing your business as their next target. Costs vary based on the depth of the search required. The more advanced the position is in the business, the more in-depth the background search—CEOs require more thorough vetting than receptionists, for example. Unfortunately, though, embezzlement cases are not uncommon for either of those positions. In the grand scheme of things, the cost of a professional background check a small price to pay for some peace of mind.

Typically, a complete and thorough background check will inform an prospective employer about the following:

  • Criminal offenses, including anything that involves theft
  • Driving records
  • Professional licenses, certifications and educational background
  • Income tax liens
  • Bankruptcy
  • Judgments, liens, and foreclosures
  • Any litigation
  • Businesses they may own or otherwise have a financial interest in
  • Evidence of narcotic use and violence

Background checks should always be performed prior to hiring, but many businesses become complacent with more tenured employees. That’s why KRESS always recommends conducting random checks during the course of employment. It makes you much harder to fool, and puts potential fraudsters on alert that you’re watching.

For more details on how KRESS helps businesses in many different industries implement background check policies effective at preventing fraud, contact our pre-employment screening experts today for a free consultation!

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