Embezzlement and Credit Card Fraud

In almost every case, white collar crimes are committed by businesses and government professionals, and are generally of non-violent nature, in which are financially motivated. The Federal Bureau of Investigation now associates a wide range of fraudulent crimes as being white collar. Credit card fraud and embezzlement are two amongst those on their list. This paper will discuss what and how these two crimes are committed, the impacts each have on businesses, and what tools are available to reduce the opportunities of each crime. First, lest start by defining embezzlement. In a nutshell, embezzlement is the theft or misappropriation of funds or property in one’s trust or belonging to one’s employer (HG.org). In order for someone to be guilty of embezzlement, the accused would have had to convert or deal with funds or property entrusted by the victim in a way that was not agreed upon. A basic scenario of this would be a manager of a convenient store pocketing money from the store’s cash register and not documenting the transaction. However, if for instance a store associate were to do the same, that associate could only be charged of larceny, because a store associate is not entrusted with the cash in the register (HG.org). Here is another example. In October of 2014, a woman was sentenced to 12 years in state prison for embezzling nearly two million dollars from her employer. Suzan Glawatz was a bookkeeper for Dr. Grassi for seven years. Hurt by the action of her employee, Dr. Grassi stated, “Ms. Glawatz’s criminal actions have changed my life in immeasurable ways. My plans to retire are completely on hold” (Brecher, 2014). Although emotional pain can come from an employee embezzling money from a company, there are also other repercussions that also impact a business. In the case between Ms. Glawatz and Dr. Grassi we see the emotional effects as well as the changing of future plans by both women. However, there are several other impacts that come from this crime; the most important of all is loss of revenue. This can then have a chain reaction. For instance, due to the loss of revenue, a business cannot hire new employees or expand. Customer and investor confidence may be lost, since these types of cases are open to the public. Then there is the worst case scenario in that a business is forced to shut down due to its losses. In short, embezzlement can drastically change a business entirely. So the biggest question is, what tools are available to reduce the risk and opportunities of an embezzlement case? According to Dana Turner, a security and training consultant, “embezzlement is one crime that is nearly 100% preventable” (Swope). With that being said, the first step to any prevention program is to analyze the risk. “An effective risk assessment device is an essential tool for security officers in determining an institutions vulnerability”, says Turner (Swope). The next step is to analyze the areas of risk. These areas may include: culture, the company’s environment, company procedures and policies, and company documents and/or records. In almost every case, embezzlers will pray on the weakest link amongst these areas. Therefore, having a well written and implementing a prevention program is crucial to reducing the risk of embezzlement. Next, we move on to credit card fraud. With the vast evolving world of technology, it seems as though nothing is safe anymore. Many of us now use the internet to pay bills, make purchases of goods and services, and sell items on a daily basis. Though it is not just the internet we have to be cautious about. Giving out personal information like credit card numbers, social security numbers, account information, and so on over the phone is just as risky. Credit card fraud can be defined as the act of using a credit card without the authorization of the true card holder. In this, there are two different schemes scammers will use; they are called “card present” and “card not present”. Both schemes are pretty much described as they sound. Card present is the act of an unauthorized user steeling the card from its holder and using it for the other users own purchases. Card not present is the act of an unauthorized gaining account information without having the actual card. Therefore, it is critical for anyone whom has a credit card to be aware of the risk. Credit card fraud is a very large issue and not one to be taken lightly. The affects alone can hurt a business or any one person. Remember back in 2014 when the Target Company was hacked? Millions of customers card information became compromised; and although customers whom were affected by this were issued new cards and were able to dispute the unauthorized charges, many customers were repelled to shop at Target again. Customers and investors alike had their trust and confidence shaken by this incident. What is even more terrifying, this could happen to any business. “In 2012, the U.S. accounted for 47.3 percent of the worldwide payment card fraud losses, but generated only 23.5 percent of total volume,” (Dolby, 2014). Nevertheless, there is always a way to minimize the risk. There are several detection programs that are made available to card holders and businesses in order to minimize the risk of fraud. A new software program called Card Kill was specifically designed to stop credit card fraud before it happened (CreditCard.Com). The program works by monitoring suspicious activity and if detected the program will cancel the card and alert the cardholder. “It's a genuine solution to a real problem," says G. Mark Hardy, CEO of the startup. "We're not replacing what's out there, we're providing a service that's not being provided." (CreditCard.Com). Capital one introduce their free detection program called Second Look. The opt-in program sends out email alerts to cardholders and flags duplicate and recurring chargers. Other credit card companies are also taking a second look at their protect programs in order to reduce the risk of credit card fraud. All in all, crime is everywhere. White collar crime such as embezzlement and credit card fraud are just two amongst a long list of crimes that have been evolving over the years. Criminals pray on the weak in order to gain something for themselves. Due to their actions, businesses stand to lose much. However, such crimes are preventable. As long as we are aware of the risks and prevention programs are implemented within an organization, almost any crime can be prevented.

References:
Brecher, E. (2014, October 8). Lancaster Woman Sentenced in $1.8 Million Embezzlement Case. Retrieved August 8, 2015, from http://www.wgrz.com/story/news/crime/2014/10/08/embezzlement-case-lands- bookkeeper-in-prison/16933203/
Dolby, A. (2014, April 24). Collateral Damage: the effect of card fraud on small businesses, Customers and the economy. Retrieved August 8, 2015, from http://www.huffingtonpost.com/adam-dolby/collateral-damage-the-eff_b_5206822.html
Embezzlement Law. (n.d.). Retrieved August 7, 2015, from https://www.hg.org/embezzlement.html
New industry tools fight credit card fraud. (n.d.). Retrieved August 7, 2015, from http://www.creditcards.com/credit-card-news/tools-fight-fraud-1273.php
Swope, G. (1995). Closing Windows of Opportunity for Embezzlement. Retrieved August 8, 2015, from http://www.bankersonline.com/articles/sfpv02n12/sfpv02n12a4.html