Commentary on fraud, scams, scandals, and court cases.

How Credible Are Fraud Tips?

Companies rely heavily on reports about questionable behavior from employees, customers, vendors, or other outside parties. Tips are the most common way that fraud is detected by companies, so any credible tip should be taken very seriously.

How does a company evaluate the credibility of a tip? Generally, it does not matter if the tipster is anonymous or not, although it’s reasonable to believe that those willing to put their names behind information do bring some measure of credibility to the information they are providing.

Reliable tips usually have a sufficient amount of detail as to be believable. The more vague the tip is, the less reliable it is likely to be. The information provided by the tipster should also make sense in light of known circumstances surrounding the company’s operation and the accused.

For example, a tip that merely states that Joe in the shipping department is acting like something unusual is going on is probably not very credible. In contrast, a report that Joe in shipping was seen in the shipping area several hours after his shift was over is a more specific tip that may be more reliable. If Joe was reported to be in the shipping and receiving area at a time when he is normally not working, and the door of the loading dock is open, this level of detail adds credibility to the report.

Should companies be worried about potential false reports of fraud? Of course. People sometimes do report false information in order to cause trouble for an enemy, an ex-spouse, or a disliked co-worker, however. It is important to assess the potential motivation of a tipster when evaluating the information. However, companies should still encourage employees to report any instances of suspected fraud or unethical behavior. It is often easy to find false reports, and the value of legitimate reports of fraud far outweighs the inconvenience of occasional false reports.

Leave a Reply