3 Hidden, Internal Fraud Schemes and How to Flag Them

detectives looking for internal fraud

In October, you may find yourself haunted by some of the scariest schemes you’ve ever seen; however, with a little detective work this Halloween you can help unmask fraudulent expenses in your organization.

Internal fraud, also known as occupational fraud, refers to making false representations, withholding information, or abusing a position of trust, resulting in financial gain at the expense of a company or individual.

Unless identified and stopped, internal fraud schemes can negatively impact the future growth and success of your organization’s card program. Here are three scary types of internal fraud to keep an eye out for and some options to help you spot them.

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The Reselling and Profiting Scheme

This spooky scheme occurs when a cardholder acts as a middleman to profit from company purchases. All they have to do is create a new eBay or Amazon Seller, and when tasked with buying something for your company, let’s say cups, for example, they can purchase the cups with a personal card, list the cups on their seller account for 30% more, then have a business credit card buy it, pocketing the profit.

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The Crowdsourcing Scheme

If your company hires outside help for projects, such as freelancers and contractors on UpWork or Fiverr, then beware of the crowdsourcing scheme. Anyone can sign up and make an account for free on sites like these. After being tasked to hire outside help, this scammer will sign up for a new account as a freelancer, hire themselves, and get paid twice for doing the same amount of work.

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The Return Scheme

Another spooky scheme to be on the lookout for this holiday season is return scams. This example of internal fraud occurs when a cardholder purchases something on their business card, then returns it on their personal credit card, in exchange for a gift card or store credit, without informing their auditor.

How to Flag These Spooky Schemes

These internal fraud examples provide the scammers with correct-looking bank data and receipts, making it very difficult to spot these spooky schemes. Further improving visibility can be achieved by implementing fraud detection technology, such as alerts and analyses that use data to identify red flags. Still, more is needed to spot scams as sneaky as these. That is when having an expense monitoring solution like Card Integrity on your side comes in handy. Using technology, automation, and a people-oriented approach, we help analyze your expense data to create reports, set new alerts, and identify areas that need closer examination. The best part is that our expense monitoring service, DataWISE, doesn’t require a lengthy implementation process and is flexible and easy to use. Click here to schedule a demo and learn more about our expense monitoring solutions. Or, feel free to call us today at 630-501-1507.

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