Some types are employee-based fraud are obvious. Others can go undetected for some time, leaving you with significant financial losses when you finally discover it. Vendor kickback schemes can be quite intricate, and leave your company unsure of how to really proceed. Since they involve both someone within the company and a business partner, there could be quite a few layers to this sort of activity, making it harder to ferret out a culprit.
Kickbacks in a nutshell
In simple terms, a kickback scheme is an illegal or unauthorized deal going on under your company's nose, usually involving bribery. What makes it tricky are the many different ways it can take shape. Employees can doctor information to make an illicit transaction look legitimate.
A kickback can also be a contractor's way of swaying someone at a company to choose them over the competition. Sketchy paperwork, apparent nepotism or over-billing can all be signs of a bribery scheme in motion. In some cases, the business is simply ignorant until a tell-tale sign gives away the game away long after the damage is done.
The crime in action
These kinds of cases can happen to anyone, but you can also see some high-profile examples in the news. For instance, the Consumer Financial Protection Bureau recently asserted that Prospect Mortgage took part in a kickback scheme that played out over five years, according to CNN Money.
The CFPB specifically alleged that Prospect paid brokers for referrals in hundreds of different secret arrangements, further claiming that it violated part of the Real Estate Settlements Procedures Act. In a statement to CNN, Prospect countered by saying it was turning over a new leaf.
"There may be warning signs of kickback fraud, but what if they're too subtle to see?"
"Under Prospect Mortgage's new leadership team, the company has rebuilt its legal, regulatory and compliance practices," the business reportedly said. "Today's settlement with the CFPB regarding alleged origination practices initiated under the prior management team, closes an important chapter in the company's history."
Investigations to the rescue
Whether corruption involves an entire company or a single actor, there's an important principle to follow: Don't let long-running illegal activity go undetected for too long.
This is one of the best reasons to use investigations ahead of time. There may be warning signs, but what if they're too subtle to see? Or what if the signs themselves don't show up until after a shady deal has already happened?
Investigations also come with these advantages, which could be especially useful in detecting kickback fraud:
- A deep dive: Uncovering one bit of employee fraud could be just the beginning, and if that's the case, you need to be flexible enough to know what to do next.
- Interrogation/Interview expertise: These cases, perhaps more than most, require specific interrogation and interview skills and the honed ability to detect deception. Confessions are the key to success in solving kickback schemes and often provide far more information than forensic accounting methodologies.
- Discretion: The employee or employees keeping the scam going could try to cover their tracks if they learn they're being investigated. Professional investigators know how to lay low and avoid drawing attention to themselves.
- Expert advice: It's often not just the investigative services you need, but the knowledge of what to do next. These can be delicate situations and you won't want to accidentally make things worse as you bring fraudsters to justice. Plan ahead as you work to find out whether any ongoing crime is in your company's name.
- Proactive support: After you notice the very first hint that something could be wrong—or even before that—your investigations team should know what to do. With enough experience on the job and time working with other companies, the service provider in charge of this will help the company put a good foot forward while still being strategic about it.
Contact Frizell Group for more private security services, including investigations, and feel safer about your company's operating procedures.