Will COVID provide the breeding space for a rise in internal fraud?
While the UK has adapted to the routine tightening and loosening of necessary controls to our everyday lives due to the pandemic, are UK businesses welcoming customers back ready for the potential of a closer to home spike in internal theft as a result of post-COVID desperation and furlough fear?
This is the question being raised by Alan Grocott, the EU trainer of the Wicklander-Zulawski non-confrontational interviewing technique, who argues that although internal theft and fraud are not contagious per se, uncertainty around the jobs market after lockdown may drive a significant minority of people into the arms of dishonesty.
“If you look at the Scales of Justice on top of the Old Bailey and on one side there is a balance of full-time employed people, with continued good prospects and on the other those furloughed or working enforced reduced hours, maybe with the ever increasing threat of redundancy – which group do you think, on the balance of probabilities are more likely to be dishonest?” he asks rhetorically.
“Remember that these could be people driven to extremes by the difficult financial situation they now find themselves in. The furlough reduced salary scheme will have an impact on those living close to their financial limits each month, and delayed mortgage payments or other postponed payments will soon be surfacing again, with lenders expecting repayments to start.
"It is important that we all take time to understand that some good hardworking people may be backed into a corner and do something completely out of character because of the situation they now find themselves in and which is out of their control.
"Or it could be that those who have been committing regular acts of dishonesty before the lockdown; the ones who have got used to the extra money and the lifestyle it brings are not going to go back to living within their means because it is too much of a shock to their system as they have become accustomed to the extra illicit income.
“The vast majority of people are hardworking and honest, but there are those who are inclined to dishonesty because they know they have got away with it in the past – and there appears to be little or no consequences from the judicial system should they be caught.
“Now, there could be even less controls and even less chance of being caught – this could be because there are fewer supervisors and even the LP teams themselves may have been furloughed. If something does come to light, there is also the possibility of a delay in it being discovered, especially if the LP team have been furloughed or there has been a moratorium on travel to carry out an investigation or interview – a lot of the deterrent may have gone,” he added.
Alan, a former detective with Greater Manchester Police and previously the Head of Loss Prevention for a leading fashion brand, fears that such delays in detection may only increase losses and profit erosion.
“If you have 500 stores and in each store there are three people stealing £100 of stock or cash a week during a full year, it would amount to £7.8million of loss over that time!
"If you were able to detect losses earlier with greater controls in place and finalise the investigation quicker with an effective interview you minimise your losses.
“Just think, if you could quickly identify and interview those responsible, in the example given, the company losses would be reduced by £650,000 for every month the dishonesty is stopped,” said Alan.
During lockdown, Wicklander-Zulawski has been carrying out its telephone interviewing technique training to great effect with many businesses. The method uses the principles of the WZ face-to-face training but attunes delegates to the more subtle audio cues – change in breathing, longer pauses and motivational language used by the interviewer – to help identify dishonesty and obtain the truth without the need to carry out the face-to-face interview.
“This is mainly used in apparently clear cut cases of dishonesty, with a high level of evidence and not in the more complex frauds involving multiple individuals, collusion and high values. However, in appropriate cases where there is clear evidence and where travel costs and risks may be inhibitive, it is a really effective method of conducting an interview remotely, establishing the truth surrounding the allegations and being able to deal with the issue quickly and effectively thereby reducing the losses that any delay could potentially increase.
"For the cases where the telephone interview may not be appropriate, the full two-day Wicklander-Zulawski courses are now thankfully back in full swing to help investigators establish the most important aspect of any interview, the truth.
“One final area of concern is issues in the supply chain with the growth of online sales in a pandemic UK. For example, one obvious risk is where for many businesses’ delivery drivers are no longer required to obtain a signature upon delivery. Anyone with experience of retail dishonesty will recognise that there will always be someone ready and willing to take advantage of any perceived opportunities for dishonesty presented to them due to the current situation.
"We have been grateful in the past that most changes in business have been gradual, allowing for detailed and effective controls to be put in place systematically to mitigate risk, but COVID-19 changed the landscape overnight, with the potential for greater debt and possible inclination to resort to dishonesty, fewer controls, delayed reaction and a reduced deterrent, which could be a perfect breeding ground for the incubation of greater internal losses.
“The change has been thrust upon us and this means that LP has to re-think the approach to meet these challenges in an environment of social distancing and controls in an ever changing retail landscape,” said Alan.
“LP professionals should be proud of their reputation for being excellent in adapting their practices within short lead times and now they are having to learn to do this almost immediately, sometimes on the hoof in order control their losses in this 'new world.
But it is a challenge that I am sure the LP community is more than capable of handling with its commercial partners and specialists ready to play their part.,” he added