Credit Check

Employee benefits aren’t what they used to be.  They reached a peak in the 1990s.  Business was booming everywhere.  Unemployment was so low that the “experts” wondered if growth could be sustained.  Then the internet bubble burst.  Then the housing market burst.  Then health care cost starting going stratospheric.  Employment plummeted and to rein in costs, employers naturally lowered benefits.

But one company in Massachusetts apparently never gave up on maintaining and even improving their employee benefits.  Their employees were too valuable.  They went above and beyond.  In one case they even paid for an employee’s pet supplies, Victoria’s Secret bills, Banana Republic clothing, lighting purchases, hotel stays, tanning sessions, limousine rides and even driving violations.  Was this a great place to work, or what?

Oh, did I mention that they didn’t know they were paying for these items?  Oops.  Sorry.

The bookkeeper for this engineering firm opted to just charge the purchases to her employer.  But she hid her tracks well.  She used cards that her employer didn’t even know about.

She obtained three credit cards in the name of the company and its chief executive officer that she charged to the company’s bank account. How difficult was that to do?  About as difficult as filling out an application form and forging a signature.  It’s not like the executive officer was negligent in looking over credit card statement.  S/he probably didn’t know the credit cards even existed!

By the time the scheme was finally exposed, this $40 per hour bookkeeper had removed over $750,000 in value from the company’s bottom line.  You can read about the case here and here.

The point of this blog article is that owners who think that “it can’t happen here” should think hard about that position.  Credit card misuse is becoming a common method of theft.  In this case, scanning credit card statements wouldn’t have detected the scheme.  But scanning the monthly bank statements might have.  The clue is that disbursements must be made.  And if disbursements to credit card companies are made more frequently than is warranted by the number of cards the business normally uses, then investigate.  You might just find an employee charging ahead of the pack.

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The TraceTech Solutions’ blog specializes in articles that discuss actual small-business frauds and what small-business owners can do to prevent them.  Start from the most-recent article here: TraceTech Solutions’ Blog. We publish new articles frequently.  If you’d like to receive a new article the instant that it’s published, click on the Subscription link in the upper right part of this page.

TraceTech Solutions provides small businesses with unique low-cost fraud monitoring and detection services.  Learn more about TraceTech’s services here: TraceTech Solutions website.