Protecting Your PEO From Payroll Fraud
While the PEO industry has experienced cases of payroll fraud sporadically for years, a pronounced uptick in member reports to NAPEO of payroll fraud incidents began about six months ago. Reports have come from across the country, with fraudulent client prospects reported in several industries, including transportation, car washes, dry cleaners, construction companies, hair salons, and gyms. In some cases, fraudulent prospects pose as legitimate companies whose identities they have stolen. Fraudsters have also perpetrated schemes through phishing and email scams to steal login credentials or impersonate company officers to request fund transfers.
When the uptick in fraud reports from members began, NAPEO not only started keeping track of them, but also:
- Mobilized the Payroll Fraud Task Force under its Accounting Practices Committee;
- Contacted the FBI about the problem;
- Initiated regular email alerts to members;
- Began developing educational resources for members such as webinars, magazine coverage, and sessions at upcoming conferences; and
- Posted a regularly-updated, members-only resource related to payroll fraud on its website, www.napeo.org/fraudalert. This resource includes: a document outlining steps you can take to protect your PEO; an email to report fraud incidents to NAPEO (email@example.com); a link to the FBI’s Internet Crimes Complaint Center (www.ic3.gov); and a listing of recently reported fraud schemes.
The task force is drafting a document, “Best Practices for Reducing the Risk Associated with PEO Payroll Fraud,” for release in the next few weeks. Early this month, NAPEO presented a webinar, “Payroll Fraud and Its Impact on PEOs,” discussing how to identify payroll fraud risk, how to proactively protect your organization, and how to respond to fraud incidents. The recording and PowerPoint presentation from this webinar will be added to webinar archive at www.napeo.org/peo-resources/tools/webinars for those who missed it or want to revisit it.
Even as members have been put at risk by the recent onslaught of payroll fraud attempts, they have come to NAPEO with information about their experiences and lent their expertise to produce educational materials to be shared with the entire membership. This feature presents a detailed picture of the many facets of the problem and a comprehensive approach to preventing fraud attempts and protecting the PEO.