Cifas warns businesses at greater risk of internal fraud over pandemic festive period

• More than half of staff filed to the Cifas Internal Fraud Database worked in branches, retail outlets and stores, with call centres seeing a significant increase
• Cifas calls on businesses to consider the risks of internal fraud over the festive period as many staff may be struggling to host the Christmas they’re used to following a turbulent 2020

Cifas is today warning organisations to protect themselves against the risk of internal fraud and theft over the busy Christmas period. During this time, many organisations hire temporary staff to cope with increased demand, particularly in the retail, warehousing, and delivery sectors, meaning organisations need to ensure they are taking steps to guard against the threat of internal fraud. Examples of these threats posed by dishonest individuals include stealing goods or cash, submitting false overtime and expenses claims or facilitating further fraudulent conduct by others.

Statistics from the Cifas Internal Fraud Database in 2019 revealed 53% of staff filed to the database worked in branches, retail outlets or stores, with the majority being discovered by internal controls put in place to detect such activity. A further 25% worked in customer contact centres, representing a rise of 45% in the number of contact centre staff filed to the Internal Fraud Database. There was also a 10% increase in the number of unsuccessful fraudulent applications for employment, with many concealing either adverse credit or their employment history.

With thousands of people losing their jobs earlier in the year or receiving only 80% of their wage for a significant period of time, many may be struggling to host the Christmas they’re used to. Together with the difficult task for organisations to implement internal controls as the pandemic impacted operations, the motivations and opportunities to commit internal fraud are both clear and obvious.

Cifas are therefore calling on organisations to consider additional controls that can be implemented to detect and deter such activity in order to protect both themselves and their customers.

Amber Burridge, Head of Fraud Intelligence at Cifas, said ‘It is vital businesses take a strict approach to their internal controls over this period. Although organisations may be prioritising customer experience, it is important this is balanced with security measures, including those put in place to detect and deter the insider threat.

‘As the country gears up to enjoy the festive period following a miserable year, temporary staff taken on at call centres, fulfilment houses, warehouses and distribution centres to cope with additional demand could pose a threat to organisations if the right checks are not in place. In particular, any temporary workers working from home at this time may pose additional threats due to the reduced oversight while they are out of the office environment. ‘Processes put in place now shouldn’t just be for Christmas either. It is vital organisations are aware of the insider threat at all times and take steps to prevent it. As we sail towards further unemployment and economic hardship throughout the UK, the problems we’re seeing from the insider threat now may only be the tip of the iceberg.’

John Browett, who has previously held the position of CEO at a number of large retail organisations such as Dunelm and Dixons Retail, and currently is the Chairman of Cifas, said ‘The retail industry need to band together in these times to minimise the risks of internal fraud and theft. Currently, employees caught being dishonest at one organisation could easily move to another and commit the same offence again, particularly during the busy Christmas period. By taking steps to remove this threat, such as sharing data through Cifas, organisations can protect their own finances, customers, shareholders and their companies’ reputation.’

One organisation who assist companies screen staff to protect against the insider threat are Reed Screening. Director Keith Rosser said ‘Temporary workers play a key role in making Christmas happen but organisations who fail to recruit and screen temporary workers properly could see Christmas turn into a nightmare.

‘There is just as much of a threat posed to business by temporary workers as there is by permanent workers. Now more than ever, due to so much financial hardship facing people, it is essential for businesses to ensure with their supply chains that temporary workers are recruited and screened thoroughly.

‘Workers need work now more than ever, and businesses need a happy end to the year. Don't let insider fraud ruin your Christmas.’

END

Notes to Editors

The Insider Threat was identified as one of the four largest fraud threats to UK organisations in Cifas’ flagship report Fraudscape 2020. Other threats identified to organisations include identity fraud, facility takeover and misuse of facility.

In March 2021, Cifas will be hosting a “Tackling the Insider Threat” week with a number of virtual roundtables and discussions to discuss how organisations can take steps to identify and prevent the insider threat. If you would be interested in receiving further details about the series of events, please email press@cifas.org.uk.

For additional insight or commentary on such threats, please email press@cifas.org.uk.

Cifas have released a video ‘Stop the fraud Bonanza’ with Cifas’ Amber Burridge, Head of Fraud Intelligence, and Sandra Peaston, Director of Research and Development, advising retailers on how they can protect themselves and their customers during the busiest shopping weekend of the year. The video can be viewed here.

For more advice on preventing fraud visit the Take Five website.

About Cifas

Cifas is an independent, not-for-profit membership organisation that protects businesses and individuals through effective and secure data and intelligence sharing between the private, public and third sectors. In 2019, Cifas member organisations prevented over £1.5 billion of fraud losses.

Cifas data is included in the Office of National Statistics England and Wales Crime Statistics of police recorded crime and works alongside law enforcement agencies in tackling fraud.

Contact us at press@cifas.org.uk