Fraud Basics

Always on duty

Basics of an effective whistleblower hotline



An anonymous whistleblower hotline should be a critical weapon of any organization’s anti-fraud arsenal. Fraud examiners should understand some of the key success factors that make hotlines good tools in fighting fraud.

In July 2019, Capital One revealed that it had been victim of a data breach in which the personally identifiable information of more than 100 million applicants and customers, including bank account numbers and Social Security numbers, were stolen or compromised. According to The New York Times coverage of the breach, a former employee of the cloud services provider used by Capital One committed the fraud. The company became aware of the issue when a tipster wrote to a Capital One security hotline to warn some of the bank’s data appeared to have been leaked. A subsequent investigation into the tip led to discovery of the breach. (See Capital One Data Breach Compromises Data of Over 100 Million, by Emily Flitter and Karen Weise, The New York Times, July 29, 2019, and The 5 most scandalous fraud cases of 2019.)

The 2018 ACFE Report to the Nations showed that tips were the most common way in which occupational fraud is initially detected. (Tips have remained one of the most common sources of detection since the ACFE began publishing the report in 1996.) The ACFE also reported that fraud losses were 50% smaller at organizations with hotlines than those without.

An anonymous whistleblower hotline should be a critical weapon of any organization’s anti-fraud arsenal. Fraud examiners should understand some of the key success factors that make hotlines good tools in fighting fraud, and they should be able to discern whether the hotlines at their organizations are operating effectively because a tip that saves a company from a potential disaster could come from anyone at any time.



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