How Technology Is Fueling Payroll Fraud

How Technology Is Fueling Payroll Fraud

Technology is truly miraculous. It has brought us wireless computing, networking and greater access to information than our ancestors could have dreamed of. However, this technology is not without its downsides. Payroll fraud has become a serious problem for businesses of all sizes, and it is being fueled by technological advances.

How Payroll Fraud Occurs

Fraud involving payroll occurs in many different ways, and as technology continues to advance, criminals will come up with new ways to exploit it. This is why employers must be vigilant, keeping abreast of industry changes and implementing the proper measure to ensure that sensitive data is never compromised. Some fraud is connected to attendance or time, while others involves the counterfeit of benefits, or gaining access to balances and checks for processing.

Fraud can be either external or internal, meaning parties outside the organization attempt to gain access to unauthorized information, or it may be internal, where employees within the organization leak information or use it for their own benefit. Many argue that internal fraud is the most dangerous, as this comes from individuals which the company trusts, who have greater and easier access to information than nonemployees.

The Dangers of Smartphones

While smartphones have provided a number of benefits to both employers and employees, they are also being used to commit payroll fraud. This is possible with the camera that is now installed in most of these devices. An employee can surreptitiously take photos of checks using their smartphone, which can then be used for deposits.

Smartphones have many other capabilities, which are why many high security buildings and installations require them to be placed in a container near the entrance, as visitors are prohibited from carrying them around the premises. Due to the fact that employees working in payroll have access to sensitive documents, companies should consider prohibiting them from carrying their smartphones into these secured areas, as this prevents them from taking photos of documents.

Processing Payroll In-House

Employers that handle their payroll in house should review their security measures carefully, particularly when it comes to password protocols. Both copiers and printers should be situated in areas that are secure, and access to them and the payroll department itself should be restricted. It is highly recommended to implement an automated clearing house if you don’t already use one.

Processing Payroll Through A Third Party

Many small businesses choose to use a third party firm in order to process their payroll. This saves them time and energy, but also places them in a position where a mistake made by the payroll processor could have disastrous consequences. Those who use third parties for their payroll should learn about the security measures they have in place to prevent fraud, and should not do business or provide their payroll data to firms that do not have or maintain adequate security protocols.

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