8 ms·

Layoffs Create a Vacuum for Fraud

57 points by oliverjudge 4y ago

spacemanmatt 4y ago
Core idea: The layoffs of today are the opportunistic fraudsters of tomorrow. Meh, maybe I'm just projecting, but I am not sure layoffs create fraudsters. That proposition needs a closer look, in my view.
danesparza 4y ago
This article is exceedingly vague. What is the point of this article, exactly? To scare corporate executive teams? To have something to point to when something inevitably goes wrong? Yes, there are mercenaries and opportunists in any economy... but writing some vague critique of opportunists doesn't make you smarter or better than them.
- Clent 4y ago
  Agreed. The article fails to provide evidence that the increase in fraud is significantly changed by layoffs. There are always people who are going to attempt to game systems. There are people who work for business and that learn about systemic loop holes. And there are also a percentage of people who when laid off with go on to exploit those systemic loop holes. But at what percentage? How many frauds per million layoffs? I cannot imagine how this would be a concern when determine the cost of a layoff.
designium 4y ago
It's like a shitpost from Reddit. It alludes that fraud will happen from disgruntled employees laid off from this business cycle. But it has no proof nor examples nor numbers to prove anything.
velavar 4y ago
While this article is pretty hand-wavy, there are some interesting trends that do arise in fraud during a downturn. I do not fully know what drives it but I suspect the following: * With more people being laid off, taking pay cuts etc. and with their sources of income drying up, they may be forced to find easier avenues to making money - especially if they have nothing to lose. * Credit companies begin to tighten the lending limits, again forcing people who may have been on the fence, to look into committing fraud. * Someone who genuinely is unable to pay off their credit card/loan or is worried about their job in a recession, might be tempted to claim unauthorized charges in order to not impact their credit scores - this would be first party fraud. Insiders would absolutely know the lay of the land and how to perpetrate fraud without being caught. There will definitely be more disgruntled employees during a recession but I am skeptical of the scale of fraud being mentioned in the article. I am unconvinced that they would put their reputation and future employment on the line for short-term illicit gains. In a strange way, we also do see a lot of fraud during a booming economy (something that another comment mentioned as being contradictory). The economy is flush with money -> companies are in growth mode and are rarely checking to see how many of their signups are from compromised identities -> the situation is ripe for third-party fraud and referral abuse. Source: I work in Fraud risk management
- dehrmann 4y ago
  I used to work for a startup that does ML for detecting payment fraud. Our untested theory was that the industry should be fairly recession-resistant because fraud increases in recessions, and fraud-prevention has measurable ROI, so you're probably not considering cutting back on it. What'll be interesting is the meta-fraud of claiming false chargebacks or what the new fraud looks like because the shape of fraud is changing, and the model wouldn't have seen as much of it.
P_I_Staker 4y ago
One thing I don't see talked about much is the move to remote. I think it could potentially enable fraud. Far easier to wall people off and control what the information they receive. I don't think it should effect to move to remote, which I'm in favor of. I just thought it was an interesting idea. Scams often rely on this kind of thing anyway. You have to control what various people see, and it might be a little easier with less people getting together to talk / gossip.
dsq 4y ago
I recall that in the wake of the end of the Cold War, the US began hiring former Soviet nuclear/bio/chem weapons experts to prevent them from selling their services to various regimes. This could be a good time for govt and military to scoop up talent, tuis time in crypto and other new fields.
ttyprintk 4y ago
Amazing to me that 5,000 Wells Fargo salesmen created millions of accounts and the total fines to the company added up to $53-$88 per account. I imagine the fees Wells Fargo would have made were close to that.
- busterarm 4y ago
  This is the same Wells Fargo that merged with the bones of Wachovia after they got caught laundering billions of dollars in Mexican drug cartel money and the subsequent fines.
  - ttyprintk 4y ago
    This article seems preoccupied with damage that a lone disgruntled employee can do, but the fraud that scales to hurt the widespread public is organized within financial institutions. Wells Fargo perpetrated this in the bull market between 2011 and 2016.
xnorswap 4y ago
The article seems to contradict itself. It asserts that in boom times the bottom lines are checked less rigorously because money is flowing freely but then also asserts that it's the bad times that has greater fraud risk because of individual incentives. Neither position felt well enough sourced or argued to convince me which is the case, whether fraud is a greater risk in a boom or bust part of a business cycle.
- peteradio 4y ago
  I think the idea is an insider can figure out the internal workings while on the job and the flows are obvious and apparently unmonitored. Upon layoff they will then execute the plan not caring so much that the score will close the loophole when its caught.
- username_my1 4y ago
  not only that, one example isn't enough to make a rule / establish a pattern. And we run a customer facing business with lots of potential for fraud and we see an increase in fraudulent behavior with economical crash, but it's the same actors the same incentives, it's not laid off employees as much as professional criminals that need the money more because their other revenue streams are drying up.
jacobsimon 4y ago
Isn’t this the plot of Office Space?
- CPLX 4y ago
  More like the plot of Superman III.
  - danesparza 4y ago
    Yes. But in that movie, they didn't go to Federal "pound me in the ass" prison.
- chrisstanchak 4y ago
  The movie was actually all about Milton
otikik 4y ago
So expect some fraud coming from crypto, in the future.
- danw1979 4y ago
  I didn’t think we did downvotes for clean, concise and factually correct snark.
- surfmadpig 4y ago
  what else is new?
whoomp12342 4y ago
if a title says "how the..." I get immeasurably frustrated when they don't actually explain how it works
- malfist 4y ago
  The whole article is garbage. Claiming companies don't care about being robbed during the good times is farcical. Ending it with the conspiracy theorist's "just connect the dots" is icing on the cake.
  - nkozyra 4y ago
    Agreed, a bunch of general ideas that are poorly- or entirely un-supported.
indymike 4y ago
Lack of money provides incentive for fraud, but that kind of fraud is usually from outside the company. Inside a company, layoffs usually expose fraud. First, money and transactions are scrutinized more. Second, when you remove people who are operating a scam or involved in the scam, the scam is usually exposed when someone who isn't in on it discovers that everything doesn't align.

57 points by oliverjudge 4y ago

Core idea: The layoffs of today are the opportunistic fraudsters of tomorrow. Meh, maybe I'm just projecting, but I am not sure layoffs create fraudsters. That proposition needs a closer look, in my view.

danesparza 4y ago

This article is exceedingly vague. What is the point of this article, exactly? To scare corporate executive teams? To have something to point to when something inevitably goes wrong? Yes, there are mercenaries and opportunists in any economy... but writing some vague critique of opportunists doesn't make you smarter or better than them.

Clent 4y ago
Agreed. The article fails to provide evidence that the increase in fraud is significantly changed by layoffs. There are always people who are going to attempt to game systems. There are people who work for business and that learn about systemic loop holes. And there are also a percentage of people who when laid off with go on to exploit those systemic loop holes. But at what percentage? How many frauds per million layoffs? I cannot imagine how this would be a concern when determine the cost of a layoff.

designium 4y ago

It's like a shitpost from Reddit. It alludes that fraud will happen from disgruntled employees laid off from this business cycle. But it has no proof nor examples nor numbers to prove anything.

velavar 4y ago

While this article is pretty hand-wavy, there are some interesting trends that do arise in fraud during a downturn. I do not fully know what drives it but I suspect the following: * With more people being laid off, taking pay cuts etc. and with their sources of income drying up, they may be forced to find easier avenues to making money - especially if they have nothing to lose. * Credit companies begin to tighten the lending limits, again forcing people who may have been on the fence, to look into committing fraud. * Someone who genuinely is unable to pay off their credit card/loan or is worried about their job in a recession, might be tempted to claim unauthorized charges in order to not impact their credit scores - this would be first party fraud. Insiders would absolutely know the lay of the land and how to perpetrate fraud without being caught. There will definitely be more disgruntled employees during a recession but I am skeptical of the scale of fraud being mentioned in the article. I am unconvinced that they would put their reputation and future employment on the line for short-term illicit gains. In a strange way, we also do see a lot of fraud during a booming economy (something that another comment mentioned as being contradictory). The economy is flush with money -> companies are in growth mode and are rarely checking to see how many of their signups are from compromised identities -> the situation is ripe for third-party fraud and referral abuse. Source: I work in Fraud risk management

dehrmann 4y ago
I used to work for a startup that does ML for detecting payment fraud. Our untested theory was that the industry should be fairly recession-resistant because fraud increases in recessions, and fraud-prevention has measurable ROI, so you're probably not considering cutting back on it. What'll be interesting is the meta-fraud of claiming false chargebacks or what the new fraud looks like because the shape of fraud is changing, and the model wouldn't have seen as much of it.

P_I_Staker 4y ago

One thing I don't see talked about much is the move to remote. I think it could potentially enable fraud. Far easier to wall people off and control what the information they receive. I don't think it should effect to move to remote, which I'm in favor of. I just thought it was an interesting idea. Scams often rely on this kind of thing anyway. You have to control what various people see, and it might be a little easier with less people getting together to talk / gossip.

dsq 4y ago

I recall that in the wake of the end of the Cold War, the US began hiring former Soviet nuclear/bio/chem weapons experts to prevent them from selling their services to various regimes. This could be a good time for govt and military to scoop up talent, tuis time in crypto and other new fields.

ttyprintk 4y ago

Amazing to me that 5,000 Wells Fargo salesmen created millions of accounts and the total fines to the company added up to $53-$88 per account. I imagine the fees Wells Fargo would have made were close to that.

busterarm 4y ago
This is the same Wells Fargo that merged with the bones of Wachovia after they got caught laundering billions of dollars in Mexican drug cartel money and the subsequent fines.
- ttyprintk 4y ago
  This article seems preoccupied with damage that a lone disgruntled employee can do, but the fraud that scales to hurt the widespread public is organized within financial institutions. Wells Fargo perpetrated this in the bull market between 2011 and 2016.

xnorswap 4y ago

The article seems to contradict itself. It asserts that in boom times the bottom lines are checked less rigorously because money is flowing freely but then also asserts that it's the bad times that has greater fraud risk because of individual incentives. Neither position felt well enough sourced or argued to convince me which is the case, whether fraud is a greater risk in a boom or bust part of a business cycle.

peteradio 4y ago
I think the idea is an insider can figure out the internal workings while on the job and the flows are obvious and apparently unmonitored. Upon layoff they will then execute the plan not caring so much that the score will close the loophole when its caught.
username_my1 4y ago
not only that, one example isn't enough to make a rule / establish a pattern. And we run a customer facing business with lots of potential for fraud and we see an increase in fraudulent behavior with economical crash, but it's the same actors the same incentives, it's not laid off employees as much as professional criminals that need the money more because their other revenue streams are drying up.

jacobsimon 4y ago

Isn’t this the plot of Office Space?

CPLX 4y ago
More like the plot of Superman III.
- danesparza 4y ago
  Yes. But in that movie, they didn't go to Federal "pound me in the ass" prison.
chrisstanchak 4y ago
The movie was actually all about Milton

otikik 4y ago

So expect some fraud coming from crypto, in the future.

danw1979 4y ago
I didn’t think we did downvotes for clean, concise and factually correct snark.
surfmadpig 4y ago
what else is new?

whoomp12342 4y ago

if a title says "how the..." I get immeasurably frustrated when they don't actually explain how it works

malfist 4y ago
The whole article is garbage. Claiming companies don't care about being robbed during the good times is farcical. Ending it with the conspiracy theorist's "just connect the dots" is icing on the cake.
- nkozyra 4y ago
  Agreed, a bunch of general ideas that are poorly- or entirely un-supported.

indymike 4y ago

Lack of money provides incentive for fraud, but that kind of fraud is usually from outside the company. Inside a company, layoffs usually expose fraud. First, money and transactions are scrutinized more. Second, when you remove people who are operating a scam or involved in the scam, the scam is usually exposed when someone who isn't in on it discovers that everything doesn't align.