Top 5 anti-fraud tips published to mark International Fraud Awareness week

ACFE has released a list of 5 Fraud Tips that Every Business Leader should act on.




The first tip is vital: Be Proactive - ‘Adopt a code of ethics for management and employees’. But a code alone isn’t enough:  it has to be enforced. And management should ask: ‘What is the culture here, and does it allow employees to behave ethically?’

Wells Fargo Bank in the USA is a recent example of a code of ethics not being enforced.  The result? Fraud.

A sales target culture motivated staff to commit fraud:  two million bank accounts were opened without customer authorisation. This led to some customers having unknown overdraft accounts, lines of credit and credit cards. These affected their credit ratings.

“Managers often tell employees to do whatever it takes to reach their quotas," alleged former Wells Fargo employees. They described intense management pressure for staff to meet daily sales targets by opening new accounts - sometimes up to 10 accounts a day. Others say that that managers told them to open phoney bank accounts and were sacked soon after notifying the ethics hotline.

Since this issue has come to light, Wells Fargo has fired over 5,000 employees. Clearly this not just ‘a few bad apples’ (the term used by the then CEO John Stumpf, to describe the problem). It suggests a business-wide cultural problem.

Wells Fargo has now issued a public mea culpa, re-working its performance measures to focus more on customer satisfaction, loyalty and ethics. It is also eliminating product sales goals for anyone in the retail banking business “to make certain nothing gets in the way of doing what is right for customers”.

Wells Fargo had to pay fines of USD 185 million – in addition to the huge blow to their reputation.

So while ACFE’s 5 Fraud Tips are a great start – enforcing the code of ethics is vital.

You can learn more about the fraud at Wells Fargo at This American Life podcast.