Word on the street is that payroll fraud is on the rise. With new modern technology, scammers have been retooling their tactics. This means employers needs to be extra diligent to be watching out for it. Fraudsters have multiple tactics at their disposal.
Here are a few examples of it. 1. Fake direct deposit setups. Fraudsters commit this fraud through multiple means. One example is they will simply acquire the employer's email address, masquerade as one of their employees, and submit a direct deposit change request to a fraudulent account. Unbeknownst to the real employee, their paycheck is suddenly being diverted somewhere else. Reclaiming stolen cyber funds is nearly impossible and the employer will be stuck with the loss.
Another example, if fraudsters gain access to an employee's email or payroll account, then they can submit bank account change requests from there. It looks legit to the employer when it really isn't. To avoid these serious problems, employers must follow strict protocols for direct deposit setups and changes. Specifically, employers and managers should confirm change requests with employees, either in person or verbally. Even better would be to institutionalize the process and have employees utilize ABC's HCM to Go mobile app to submit direct deposit changes. Once submitted, the approving manager will receive a notice to complete the approval process, which includes speaking directly with the employee. The change does not go live until the manager approves it in the payroll system.
2. Falsified timesheets. If your employees are tracking work time on paper then there is risk of inflated numbers. Statistics show that employers lose 2% of payroll to inflated and incorrect time punches. This may not seem like much, but over the course of a year it can add up to thousands in losses. Even timeclocks without biometrics can allow for buddy punching, where one employee clocks in for other employees who aren't present. If you are looking for an investment that will pay for itself, save you money, and keep your workers honest, a timeclock with biometrics is a good place to start. Contact ABC to learn about our solutions.
3. Ghost employees. Usually this is perpetrated internally. A rogue manager will add fake employees to payroll, supply hours to these fake employees, and then cash the fraudulent checks for themselves when payroll arrives. If undetected, employers can lose a lot of money from this scheme, and getting it back will be extremely difficult. This means it behooves employers to perform occasional audits of payroll to ensure every employee is legit.
Adding a few simple steps to your employment practices can save you thousands in losses and avoid major headaches associated with fraud. If you have any questions or would like to upgrade your payroll account to include biometric timeclocks, or need help systematizing your direct deposit setups (Related article: Automatic Business Computing - How We Can Help), give us a call at (877) 297-5460.