Why Your Fraud Hotline May Be Failing

As a business owner, you know just how detrimental fraud can be. You also know that the best way to stop fraud within your organization is to encourage whistleblowing. So, you set up an anonymous hotline, send a memo to your employees, and wait for the calls to come…

But what happens if they don’t?

Don’t be fooled: no calls doesn’t mean your business is fraud-free. Here are a few reasons why your fraud hotline isn’t working — plus a few tips to help you get that phone ringing.

Importance of a Working Compliance Hotline 

Before we can talk about why your fraud hotline is failing, let’s talk about why you need it to succeed. As we mentioned earlier, fraud can be devastating to a business (particularly small businesses), and hotlines are one of the best ways to uncover this type of misconduct.

Fraud hotlines can help you catch bad actors as soon as possible, saving your business countless losses. According to research from the Association of Certified Fraud Examiners (ACFE), a fraud hotline can help reduce the duration of a fraudster’s scheme by as much as 33%! The sooner you learn about fraud within your business, the sooner you can stop it.

Reasons Why Your Hotline Isn’t Working

Using fraud hotlines can be hugely beneficial to your business. However, you will only reap the benefits if you use and promote the hotlines correctly. If you don’t, you may find yourself falling victim to one of the following hotline pitfalls — which can spell trouble for your company.

Leadership 

All changes to company culture have to come from the top if you want them to stick. Fraud hotlines are no exception. If your organization’s leaders don’t prioritize the hotline, your employees will be far less likely to use it!

Make sure that your business’s leaders openly promote the fraud hotline by reminding employees of its existence and providing clear instructions for using it (ideally through signage or references employees can access on their own). This can make a huge difference in the number of reports you receive.

Lack of Training

Most of your employees won’t give your fraud hotline a second thought — until the day they need to use it. In this situation, you must properly train your staff on how to access the hotline and report what they’ve seen.

Your employees should have easy access to information about your fraud hotline. They should also be able to find this information on their own in an employee handbook or online portal. After all, the anonymity of the hotline is ruined when employees have to ask their manager for the number!

Unused Data/Reporting

Your fraud hotline may be failing EVEN IF you are receiving regular reports. How? If the insights you receive aren’t being examined or used to make changes. Your fraud hotline does much more than weed out bad actors; it tells you where you can improve the workplace.

Use the data from your fraud hotline to inform how you train employees. Use it to enhance your online security. No matter what reports you receive, the information can help you get a clearer picture of your company, and you can always use it to your benefit!

Nervous Employees

One of the biggest reasons that employees don’t speak up when they witness fraud or other forms of non-compliance is the fear of retaliation. They don’t want to speak up if doing so costs them their job, their chances at a promotion, or simply a pleasant working environment.

This issue can be challenging to overcome, but it speaks to the importance of great non-compliance training. Make sure your employees understand whistleblower laws, as well as your company’s anti-retaliation policy (if you don’t have one, get one). This will help assuage fears and likely lead to an increase in reports.

Lack of Action 

Finally, the last thing that can contribute to a failing fraud hotline is a business’s failure to take action. If your employees report misconduct, but you deem it “not credible” and fail to investigate, your employees will believe that you simply don’t care! Not only will this behavior lead to fewer fraud reports, but it will also erode the trust between you and your team.

Every time there is an employee complaint on your hotline, it’s critical to take some action. Whether that means a full investigation or an in-house memo reminding staff of some rules depends on the claim, but taking SOME action is essential.

With the right training (for employees and yourself), your fraud hotline can quickly become a benefit to your business. Visit ComplianceLine today to learn more and see how our services can help your organization grow.