Layoffs Create a Vacuum for Fraud
thewiretap.io
thewiretap.io
* With more people being laid off, taking pay cuts etc. and with their sources of income drying up, they may be forced to find easier avenues to making money - especially if they have nothing to lose.
* Credit companies begin to tighten the lending limits, again forcing people who may have been on the fence, to look into committing fraud.
* Someone who genuinely is unable to pay off their credit card/loan or is worried about their job in a recession, might be tempted to claim unauthorized charges in order to not impact their credit scores - this would be first party fraud.
Insiders would absolutely know the lay of the land and how to perpetrate fraud without being caught. There will definitely be more disgruntled employees during a recession but I am skeptical of the scale of fraud being mentioned in the article. I am unconvinced that they would put their reputation and future employment on the line for short-term illicit gains.
In a strange way, we also do see a lot of fraud during a booming economy (something that another comment mentioned as being contradictory). The economy is flush with money -> companies are in growth mode and are rarely checking to see how many of their signups are from compromised identities -> the situation is ripe for third-party fraud and referral abuse.
Source: I work in Fraud risk management
What'll be interesting is the meta-fraud of claiming false chargebacks or what the new fraud looks like because the shape of fraud is changing, and the model wouldn't have seen as much of it.
It asserts that in boom times the bottom lines are checked less rigorously because money is flowing freely but then also asserts that it's the bad times that has greater fraud risk because of individual incentives.
Neither position felt well enough sourced or argued to convince me which is the case, whether fraud is a greater risk in a boom or bust part of a business cycle.
And we run a customer facing business with lots of potential for fraud and we see an increase in fraudulent behavior with economical crash, but it's the same actors the same incentives, it's not laid off employees as much as professional criminals that need the money more because their other revenue streams are drying up.
Yes, there are mercenaries and opportunists in any economy... but writing some vague critique of opportunists doesn't make you smarter or better than them.
There are always people who are going to attempt to game systems.
There are people who work for business and that learn about systemic loop holes.
And there are also a percentage of people who when laid off with go on to exploit those systemic loop holes.
But at what percentage? How many frauds per million layoffs?
I cannot imagine how this would be a concern when determine the cost of a layoff.
It alludes that fraud will happen from disgruntled employees laid off from this business cycle. But it has no proof nor examples nor numbers to prove anything.
I don't think it should effect to move to remote, which I'm in favor of. I just thought it was an interesting idea. Scams often rely on this kind of thing anyway. You have to control what various people see, and it might be a little easier with less people getting together to talk / gossip.
Inside a company, layoffs usually expose fraud. First, money and transactions are scrutinized more. Second, when you remove people who are operating a scam or involved in the scam, the scam is usually exposed when someone who isn't in on it discovers that everything doesn't align.
Meh, maybe I'm just projecting, but I am not sure layoffs create fraudsters. That proposition needs a closer look, in my view.