Fraud Prevention: A Key To Employee Financial Wellness

How financial fraud impacts employees

A growing trend in today's HR environment, workplace-sponsored financial wellness programs provide vital financial education and assistance to employees globally. Whether benefits come in the form of financial counseling, pension/401k education, or budgeting advice, for employees, financial wellness is now the third most desired wellness program —  behind only stress management and physical fitness. 

As Covid-19 continues to make many people's financial futures more uncertain than ever, perhaps unsurprisingly, the demand for financial wellness programs has increased exponentially in the past 12 months, with 72% of business leaders saying employees are now turning to wellness programs more frequently. 
 

However, while helping employees, making smarter decisions regarding their finances is vital, with financial fraud attempts also tripling in the last year alone, financial wellness programs need to do more than just give employees good advice. To provide employees with genuine financial wellness, a proactive financial wellness benefits program also needs to equip employees with the tools and knowledge they need to steer clear of fraud.  

How Financial Fraud Impacts Employees

While financial fraud was proliferating even before the pandemic, Covid-19 saw cybercriminals working overtime as new avenues of extortion opened up. The Federal Trade Commission (FTC) predicts that Americans have lost $382 million to Covid-19-related fraud. From phone scams to phishing emails, all types of cyberattacks were on the rise in 2020, with the median loss per person ranging from $330 to $900. 

On the other hand, identity theft, which affected at least 1,387,615 people last year, costs an average of $1,343 per victim and can take hours, days, and sometimes even months to remedy. While some losses can be recovered, others can put employees permanently out-of-pocket, and, crucially, the vast majority of identity theft victims remain oblivious as to how cybercriminals got their hands on their personal information in the first place. Not knowing the root of the problem (i.e., was personal information leaked in a data breach or is it available on a data broker site for anyone to see) is precisely why 21% of individuals fall victim to the same crime multiple times.

The effects of identity theft and financial fraud also extend far beyond financial difficulties. A study by Identity Theft Resource Center (ITRC) found that identity theft can also lead to severe emotional distress, time off from work, ruined relationships, an inability to concentrate, start/relapse into unhealthy behaviors, new/renewed physical illnesses, and loss of interest in activities and work, among other things. Importantly, a significant number of identity theft victims don’t realize their identity was stolen until at least a year later — greatly complicating remediation efforts. Moreover, the number of victims who are able to clear their identity theft cases within a year is, disturbingly, decreasing. 

Scams Targeting Employees Are a Significant Employer Concern

Unfortunately, it’s not just employees that suffer from financial fraud scams; their employers are equally at risk. With human capital likely to be any organization's biggest operational asset, businesses need to know that privacy protection is too important to remain a personal matter. 

One critical area where employee and employer privacy issues intersect is cybersecurity. A surge in email phishing scams means that more employees are clicking on malicious links and sharing sensitive information with threat actors. In a study on the impact of phishing attacks on global workers, 20% of employees admitted to clicking on phishing links, an increase of 9% from 2019, with North American participants faring the worst (25.5% click rate). 

In addition, as many as 67% of those who clicked on phishing links used their login credentials compared to only 2% of workers who did so in 2019. Considering that 73% of employees use the same passwords for both their personal and work accounts, gaining access to an employee’s Netflix account can be an easy way for a hacker to breach an organization’s corporate network.

Even in cases where financial scams targeting employees may not appear to directly affect their employer at first glance, the impact on an organization may still be substantial. For example, an employee in financial difficulty is more likely to steal from their employer. Out of all the companies that were hacked between 2018 and 2019, half said the incident was an inside job. Overall, the damage done by employee embezzlement rose by 9% between 2019 and 2020.

Financial stress can also negatively affect worker morale and productivity. According to the Society for Human Resource Management, employee personal financial issues cause a 34% increase in absenteeism and tardiness. In fact, employees that are financially stressed tend to miss almost twice as many days as their unstressed colleagues. On the flip side, concerns over money may also lead to presenteeism, i.e., a situation where employees physically come into work but are not mentally present. Not only can this hurt a company’s bottom line, but it can also result in employees making costly mistakes. After all, distracted employees are far more likely to click on a phishing email. 

How Employers Can Safeguard Their Employees from Financial Fraud

Although the range of topics workplace financial wellness programs address today has increased to incorporate advice on things like saving for retirement, planning for health care costs, and budgeting, most programs still fail to provide protection against identity theft and fraud. 

Offer Proactive Privacy Protection to Employees

For cybercriminals, data brokers and people search sites are a goldmine for finding personal information that can be used to commit identity theft, craft convincing phishing emails, and break into personal and corporate accounts. 

Data brokers comb publicly available sources and other parts of the web (like employee social media accounts and online forums) for personal information (including an employees phone number, address, marital status, interests, employment history, and more), which they compile into comprehensive profiles before listing them for sale. Most of the time, there are no criteria as to whom these profiles can be sold to, and in the wrong hands, this data can do a lot of damage and give threat actors a powerful source of leverage.

Unfortunately, removing this personal information off the web is not easy. Although many data brokers give people the option to opt-out of their databases, the reality is that doing so is complex and time-consuming. Opting out of data brokers is a process that can involve filling out lengthy online forms or even making phone calls. It’s also something that needs to be done continuously, as data brokers are known for relisting people’s profiles even after they’ve opted out. 

To prevent employee personal information from being used for nefarious purposes, employers should consider investing in a privacy protection service, that scans the web and submits opt-out requests on employees’ behalf. Alongside reducing the risk of financial fraud, these types of services also minimize the chances that employees will be subjected to robocalls, doxxing, and online harassment. 

Online Safety Training to Educate Employees 

Often, it’s employees themselves who put their personal information most at risk. 

Employee propensity to live their lives on social media is particularly worrisome. Not only does social media affect workplace productivity, but the information employees post online can be used against them in social engineering attacks. Recent research by Tessian found that more than 80% of American and British employees overshare on social media, likely exposing themselves and their organizations to financial fraud. Even the way employees phrase their out-of-office messages can give ammunition to cybercriminals looking to impersonate them.

Giving employees training on how to use social media safely can go a long way in protecting their financial future. Employees should be taught to keep their social media accounts private, be mindful of who they accept as their friends, and avoid sharing too much personal information. 

With 97% of users unable to recognize a phishing email, employees need training on how to spot and avoid email and phone scams, as well. Research by Know4Be shows that three months of simulated phishing attacks can decrease the number of employees that fall prey to social engineering scams by 15%.

Identity Theft Protection and Credit Monitoring to Provide a Last Line of Defense 

A reactive solution, identity theft protection and credit monitoring services will notify employees if their identity is stolen. 

While credit monitoring services keep an eye on employee credit scores for any indication that a new financial account was created in their name, identity theft protection can also monitor for suspicious activity involving their identity and alert them if their personal information appears for sale on the dark web. Some identity theft protection services can also help employees who have fallen victim to the crime. 

At the moment, only 26% of employers offer identity theft protection. However, 70% would consider adding this benefit in the near future.

Final Thoughts

With financial fraud affecting increasing numbers of employees, it’s important that employers show an understanding of the stress and anxiety financial crime can cause. However, while a clear separation between someone's personal and professional lives is fine in theory, employee money problems rarely stay at home and often permeate into their corporate lives. 

By offering employees a financial wellness program that also gives them protection from the worst threats to their financial safety, you can at the very least help them overcome some of the issues that keep them from focusing at work. 

Acknowledging that employees are more than likely to fall for financial fraud and putting tools in place to help them combat these threats can protect both employees and the companies their work for. 

Rob Shavell is the Co-Founder and CEO of  Abine / DeleteMe.   Connect Rob Shavell Follow @RobShavell