Why Hotlines Are Essential for Workplace Fraud Detection

Does your organization have the proper controls and tools in place to detect fraudulent activity? Fraud detection is an essential part of preventing fraud within a workplace. The better your organization can detect fraud, the more deterred an employee will be to commit it due to the higher risk of being caught. There are many ways fraud can be detected in the workplace. According to the Association of Certified Fraud Examiners (ACFE) latest Report to the Nations, a global report detailing real studies of occupational fraud and abuse, the most common method for detecting fraud is by an anonymous tip. 42% of the cases highlighted in the report were detected due to a tip, and 55% of those tips were reported by employees.

This data speaks to the significance that a fraud hotline can have in an organization. Fraud hotlines provide an anonymous channel for employees to speak up against fraud without fear of repercussions. The 2022 Report to the Nations included several key statistics as to why hotlines are useful detection tools in an organization, including the following:

  • Financial losses due to fraud were two times higher at organizations without hotlines. The average loss at organizations with hotlines in place was around $100,000 while organizations without hotlines lost about $200,000.
  • Organizations that utilize hotlines detect fraud more efficiently with an average span of 12 months, whereas companies without hotlines take around 18 months to catch a fraudster.
  • Fraud prevention and hotline training increases the likelihood of fraud detection by tip. 45% of cases in the report were detected by tip with training and 37% where detected by tip without training.
  • Larger organizations are more likely to detect workplace fraud through tip than smaller ones. Employers with more than 100 team members had 44% of cases detected by a tip in the report. 33% of fraud cases were detected by tip at organizations with less than 100 staff.
  • Since 2012, the percentage of tips made through hotlines has greatly increased from 42% to 58% in 2022.
  • Telephone hotlines have declined in use. They were once the most popular reporting mechanism in 2018 with 42% of reporters using them to submit tips. Now web-based and email tools are used more frequently, with email being the most preferred with 44% of whistleblowers using it in the 2022 report. Web-based tools came in at 33% of tips submitted and phone lines dropped to 27%.

There were many additional findings in the report beyond hotline statistics that are incredibly insightful. To view the full Report to the Nations, click here.

The above data illustrates the power a hotline can have in combatting fraud in an organization. It also highlights the importance of pairing a hotline with regular training and using more than one channel to gather tips from employees. That’s why BerganKDV created PlainSight, a completely anonymous fraud hotline tool designed with ease of use and confidence in mind.

The tool includes a traditional phone line and an intuitive web-based form so that employees can opt for whichever reporting method they are most comfortable with. Once a tip is submitted, our fraud experts at BerganKDV will evaluate to determine if a formal investigation is needed and will assist you with the next steps.

Preventing and detecting fraud starts with creating a culture where employees are empowered to make a difference and say something when they see something. This culture can’t be fostered without the use of robust fraud detection methods and training. Want to learn more about what PlainSight can do for protecting your organization against fraud? Let’s have a conversation!


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CATEGORIES: Forensic and Data Services | Tech & Innovation
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