10 Surprising Stats About Business Crime

Crime pays, as the old saying goes, but it robs immediate victims as well as public consumers.

To create more awareness regarding business crime, this article addresses threats often overlooked.

One out of three small business bankruptcies is due to employee theft

That promising new hire you brought on could be the undoing of your business.

Your single biggest threat to small business security may be your employees. The Service Management Group says 33% of all business bankruptcies can be blamed on employee theft.

Estimates vary from as high as 75% of employees have stolen at least once from their employer.

In a true-life example, a client of SCW’s utilized his new business surveillance camera system to expose a ring of employees who covered for each other to take extended breaks each day outdoors.

While employee theft can present in various ways, it can be caught by implementing commercial-grade cameras. The presence of high-visibility business surveillance is a major deterrent to employee theft.

Small businesses are big targets

Small businesses outnumber large ones and employ nearly half of the U.S. workforce. Though their revenues are less than their bigger counterparts, small businesses may be targeted more for criminal activity.

The Association for Certified Fraud Examiners says 39% of reported instances of fraud occur in companies with ninety-nine or fewer employees. The U.S. Small Business Administration reports less than half (48%) of them have any preventive measures in place, such as a business surveillance system. That could contribute to crime as a major factor in up to 30% of small business failures.

“In addition, small business ventures with less than $5 million in annual revenues may be up to thirty-five times more likely to become a crime victim than their larger counterparts.”

50,000+ people die on the job every year due to employer safety neglect

“More than 50,000 people die on the job every year because of occupational hazards that are known by an employer, but not addressed.”

That shocking business crime fact never makes the nightly news cycle. Though employee death on the job due to safety violations tops all business liability issues, the majority of incidents never make it to court.

Those rare cases where justice is served often become movie favorites. Think Julia Roberts in Erin Brokovich and John Travolta in A Civil Action.

Liability or lie-ability?

On a daily commute years ago, a radio station announced from a poll the answers Americans had given to the question, “How do you plan to get rich?”

Number one answer: Win the lottery. Number two answer: Sue someone.

Knowing that lawsuits are on the mind of many, anywhere on a business property can be the potential site for either genuine accidents or false claims of liability.

A study done by The Hartford averaged out the price tags of the top ten claims. Of those related to liability, none were cheap: Vehicular accident: $45,000; Customer injury or damage: $30,000; Customer slips and falls: $20,000; Struck by an object: $10,000.

Burglars are repeat customers

A British survey revealed that repeat victimization from robbery is due to location, the absence of business surveillance systems, the attractiveness of goods, and the success of previous attempts. (In Britain, 2% of retail premises experienced 25% of the retail burglaries).

That’s not the kind of repeat business anyone is seeking!

An average white-collar crime can exceed $500,000

The average amount of money stolen in an armed robbery is slightly over $3,000. Compare that to an average white-collar business crime that can easily bring losses over $500,000. Fraud and other forms of white-collar crime cost US organizations more than $400 billion every year.

In addition to the FBI, who investigates 35% of white-collar crime incidents, the IRS, DHS, and SecServ round out the top 5 investigative agencies. Those investigations resulted in over 5,000 arrests for a white-collar crime for every 100,000 people in the United States.

White-collar criminals are not necessarily non-violent

The prevailing notion is that white-collar crimes are non-violent and are committed by those who are non-violent in nature

In the paper, “From White-Collar Crime to Red-Collar Crime,” authors Richard G. Brody and Kent A. Kiehl make the point that, “Red-collar criminals look the same and often act the same as everyone else.

“Anyone could potentially become a white-collar criminal and anyone can potentially become violent. With this in mind, it is easy to conclude that just about anyone could become a red-collar criminal when the right amount of pressure is present in a given situation.”

Their study challenges the notion of non-violent, white-collar crime. Others agree.

“This subgroup is referred to as red-collar criminals because they straddle both the white-collar crime arena and, eventually, the violent crime arena. In circumstances where there is threat of detection, red-collar criminals commit brutal acts of violence to silence the people.

Executives cause 16 times higher business losses than their employees

The business crime losses caused by executives of companies are sixteen times higher than the losses caused by their employees. Mangers account for losses four times the amount caused by employees.

The most costly abuses don’t occur in large organizations but companies with less than 100 employees.

Medical fraud top the lists of prosecuted business crime

The most common criminal white-collar cases handled by attorney generals’ offices around the country involve medical fraud.

Healthcare fraud is a business crime that victimizes everyone—individuals and businesses alike. It causes tens of billions of dollars in annual losses. It can raise health insurance premiums, expose you to unnecessary medical procedures, and increase taxes.

Medical fraud hits employers in the form of false liability claims from employees

Fraud committed by medical providers includes:

• Double billing: Submitting multiple claims for the same service
• Phantom billing: Billing for a service visit or supplies the patient never received
• Unbundling: Submitting multiple bills for the same service
• Upcoding: Billing for a more expensive service than the patient received

Cybercrime complaints and dollar losses for 2020 were the highest since tracking began in 2000

Number ten of our surprising stats is cybercrime.

The IC3 reported that 2020 cybercrime complaints and dollar losses were the highest since the center began tracking statistics in 2000. From identity theft to hacking, electronic data is a valued target.

High-profile data breaches continue to make business crime news with security inadequacies and exposure of customers’ data:

• January 202 Microsoft: 280 million customer records left unprotected on the web
• March 2021: an estimated 30,000 US-based organizations affected by Microsoft server vulnerabilities
• March 2021: Verkada 24,000 customers’ private data and 125,000 surveillance cameras exposed and left unprotected on the web by a super admin password
• March 2020 Marriott Hotels:5.2 million customers’ personal information hacked
• February 2020 MGM: Resorts 10.6 million guests’ personal information exposed
  December 2020 SolarWinds: software breached 18,000 government agencies

“One form of cyberattacks, using emails (phishing) or texts (smishing) supposedly from a reputable company that induces people to supply personal information, was the most used method of cyberattack, accounting for 44 percent of all cyberattacks. Ransomware accounted for 18 percent of cyberattacks and malware accounted for 12 percent.

“Losses to individuals and businesses totaled $4.2 billion, up 20 percent from 2019. Business email compromise continued to cause the most losses, with about $1.8 billion in losses.”