Overachieving Fraud Wolves in Sheep's Clothing

Targeting Top-Performing Employees Gaming the Bonus System

By Jeffrey Horner, CFE, CRCMP



JanFeb-wolves-in-sheeps-clothing Follow this CFE consultant as he uncovers top collection reps at a business call center who inflated their performances for more money and job advancement. Lesson? Do not always follow the money.

Sometimes we find fraudulent activity occurring in the most unsuspecting places. What started out as a routine examination into a tip from an anonymous call-center employee who was concerned with the large number of suspicious credit card payments a few fellow employees were processing, turned out to be the discovery of a whole new area of call center fraud operating right under the noses of management, compliance, internal audit, quality assurance and even fraud committee members.

A call center environment can foster many credit card processing scams. The most popular is for call center agents to retain credit card account numbers, expiration dates and security codes for themselves or to sell to fraudsters. We also see this scam in restaurants and other retail industries. Fortunately, in this case, the employee who called the hotline supplied the locations and names of the suspicious employees and claimed that the number of payments they processed was far beyond the norm. 

As an outside consultant, I first had to become familiar with the work of the business unit and the group in which the suspected employees worked. That unit handles inbound and outbound phone calls with customers who are past due on delinquent accounts. The collectors, who use defined call scripts, process payments through a number of payment options for consumers, including mailing payments, self-performed Internet payments, check by phone, automatic account debit and, naturally, credit card and debit card payments processed over the phone. The company provides exceptional training services for the employees and monitors their work so they comply with company policies, procedures and applicable federal, state and even some local statutes. An automated account management system documents all work, and the company records all phone calls.

Next, I zeroed in on the accused employees because the tipster had not provided specific details of the alleged fraudulent conduct. I listened to call recordings, reviewed the corresponding accounts associated with calls and sat in on some blind monitoring of the collectors' live calls. Nothing seemed out of the ordinary. The targeted collection representatives were very professional, positive and helpful to consumers. 

I expanded the investigation to several previous months and increased the sampling of calls and accounts. I reviewed consumer complaints containing allegations of unauthorized charges to see if these collectors had handled them. I still found no questionable conduct. As a final part of the examination, I interviewed the entire business unit staff to uncover any other employee suspicions of fraudulent activities. I immediately saw that the group members were extremely competitive, but management encouraged this through bonuses and advancement to high achievers.

After six or eight interviews, I believed I discovered the employee who filed the anonymous report to the hotline. She made remarks that those who "know how to work the system" are the ones who make bonuses and advance, while those who "play by the rules" are stuck, live paycheck to paycheck and are passed over for promotions. She struck me as either a disgruntled employee or someone tired of seeing cheaters prosper. After a few additional probing questions, I had what I needed to develop a theory for what may be the most unsuspecting fraudulent activity I have ever uncovered. I tore into the historical performance measurements, metrics, reports and employee files of the business unit. What I found was shocking.

My interviews with the business unit's management and review of historical documentation showed clearly that the top collection representatives processed over the phone as much as two to three times the number of credit card and debit card payments as the average collector. Incentives for the number of credit card payments allowed representatives to earn bonuses. 

After I traced the payments to the accounts, I noticed that some collection representatives would set up customers on payment plans to charge their credit cards once or even twice a week, instead of the typical payment plan for once every two weeks or monthly. The total amount the customer paid was the same, but it was broken down into smaller amounts and processed regularly to increase the number of payments per week. Ironically, these "top-performing" employees appeared to be the most talented, dedicated, hardest-working phone representatives in the business unit.

As I reviewed the employment records and performance reviews of the current and former supervisors and managers of the business unit, I found it crystal clear that they had all worked their way up in similar fashion. They routinely outscored their peers at the performance metrics. I expanded my investigative analysis to other call center business units and found the same conduct.

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