A fraud investigation can cause an uneasy feeling amongst employees. Employees can start to feel threatened in their job, as if a witch hunt is going on, they can become defensive, and lose their sense of security within the company. Employees tend to take things to heart, they may feel as though they will get in trouble even if they did nothing wrong and their job is on the line regardless. It is hard to conduct a fraud investigation without making employees uncomfortable.

Punishing the fraudster could make an example of them, it could be necessary to deter other potential fraudsters. If the amount is a large loss then punishment makes sense, it does not, however, make sense if the fraud amount is small and the cost of punishing the fraudster would be greater than the cost of just letting them go.

My company recently had a fraud incident in which an agent was stealing $50 gift cards, in all it was close to $2000 worth, she said she was giving them to clients, but a tipster let management know we should probably check on those. When the owner of the company called the clients that supposedly received the gift cards they had never received them. The owner then confronted the agent who had nothing to say on the matter beyond getting slightly defensive, although since she knew she was caught she couldn’t defend her actions. In this case the employee was immediately let go. The owner of the company made an example of her by telling everyone else in the company what she had done and that now we had to set verification methods for all gift cards. In this case, her punishment was being let go without pay and everyone knows what she did.

Victim’s anger can easily ruin an investigation because they can quit before an investigation has been completed, they can destroy evidence, they can turn other employees against the company, they can talk bad about the company to current and potential clients, or they can cause a scene disrupting business productivity. Fraud investigations are sometimes necessary, but also pose potential problems for the employees and business. It is best to keep as much of the investigation on the down-low until it absolutely cannot be contained any longer.