Fraud is a common crime in the UK and can badly effect businesses and their profits.
Many fraudsters these days have a variety of ways of committing fraud and most "get away with it" by transferring money between accounts and taking out cash payments to avoid getting caught.
Lying and fraud go hand in hand, so in this post we cover how to spot a liar and the key signs of fraud you should be looking out for.
How to Detect a Liar
Although it's difficult to identify whether a person is lying or not, here are a few signs you can look out for which should raise suspicions.
Typically people show signs of lying through body language. From simply showing signs of discomfort to eye contact. While there is no certain way of knowing whether a person is lying or not, there are things you can notice from a person's body language.
Generally, people who are being honest feel comfortable, while people who are lying don't.
When we’re nervous or uncomfortable, we all unconsciously manifest our distress with the use of pacifiers. We use these gestures and body movements to help soothe and comfort ourselves in uncomfortable situations, like the following few below:
Rubbing the back of the neck
Eye blocking, e.g. closing eyes tightly or even covering eyes with hands
Rubbing palms on legs
Every person uses different pacifiers as a part of their personality and behaviour. Seek out the pacifiers your potential liar uses, although you should keep in mind that just because a person shows signs of discomfort around a topic, it doesn’t mean they’re necessarily lying.
When identifying the truth or a lie, watching for synchrony is key. Synchrony is the alignment of what is said verbally and non verbally, between events and emotions, and between the circumstances of the moment and what is being said.
For example, you would usually expect a parent whose child is missing to be hysterical and begging for the police to get out there and find their baby. However, if a parent seems detached or aloof, something is probably wrong...
Synchrony should also be present in the way a person moves their head. If a person’s head begins to shake either in the affirmative or in the negative as he/ she speaks, and the movement occurs simultaneously with what he/ she says, then you can typically rely on the facts given from the statement.
However, if he/ she does the head shake after he makes the statement, the statement is likely to be false. You might even notice a person verbally saying “yes,” but shaking their head “no.” If what they say doesn’t match with what their body says, you may have a liar on your hands.
2) Little or no movement.
When people lie, they tend to keep their body very still, they fear the danger of being caught lying. So naturally their brain will tell their body not to move, because just maybe, if they stay still, you won’t see that they're lying.
4) Palms up?
One interesting hand gesture that individuals who lie tend to use is the rogatory position, or speaking with their palms faced up. People tend to do this without realising, when they want you to believe what they’re saying.
It’s similar to begging in prayer. People who tell the truth will not need to ask to be believed, so they won’t take on the rogatory position, and their palms will be facing down.
5) Eye contact and direction
When people concentrate on something visual, they tend to look upwards. If they look up and to their right, it means they’re concentrating on something visual that they’re remembering from their past. If they look up and to their left, it means they’re focusing on something they’ve created in their minds.
So if the person you’re talking with looks up and to the left as they recollect what happened, they may be making up the story right there on the spot or trying to remember what they have rehearsed.
People typically show verbal signs when they lie, both in the tone of their voices and in the stories they tell. While there is not a sure-fire way to know if someone is lying, there are things you can listen for that should set your alarm bells ringing.
1) Speech Patterns
You might notice a higher pitch in tone, stuttering, clearing the throat or frequent pauses. The person might use filler words such as "uh, er, oh" and "um" during moments of hesitation as their lies are put together. It's also typical for a person to get tongue-tied and lose his/ her thoughts in mid-sentence.
2) Repeating Questions
As lies are formulated, the person needs time to think. Instead of giving you an answer straight away, you might hear your question repeated back to you or notice a slight pause between answers. A potential liar might also ask you to repeat the question you just asked, even though you know he/ she heard you the first time. These are the tactics that liars use to buy themselves time before responding.
Defensive behaviour, such as denial and trying to make the other person feel guilty might also be used as the liar tries to create empathy. You might hear things like, "I would never lie" as the person tries to convince you he/ she is innocent.
Most people caught lying will flat out deny it and maybe even become angry. Everyone tells lies sometimes, so anyone who says they "never lie" is probably lying.
4) Changing the subject or story
Subject changes are another sign of lying, the person might also tell a story that lacks detail. If the story you are hearing starts to change or if you are hearing different things at different times, this is a strong indication of lying.
Liars will also contradict themselves, they'll make statements that don't completely make sense. If you begin to feel suspicious, continue to ask questions and look for details that don't fit together.
5) Unwilling to co-operate
Liars do not want to be found out and will be significantly more uncooperative than someone who is telling the truth. As you push the person to tell you more, there are more opportunities for them to slip up, and you might detect frustration or anger. You'll likely hear complaints, negative statements and multiple protests from a liar.
The 7 Key Signs of Fraud
Once you have detected a liar, and you wouldn't put fraud past them either. You can then begin to identify the signs of a fraudster and then where to go from there...
1) Unusual behaviour and frequent complaints
The fraudster will often display unusual behaviour, which is a strong indicator of fraud. He/ She may not ever take a holiday or call in sick in fear of being caught.
There can be other symptoms like changes in behaviour such as increased drinking, smoking, defensiveness, and unusual irritability and suspiciousness.
Complaints have also been known to be some of the best sources of fraud and should be taken seriously.
We would all like to believe our employees are loyal and working for the benefit of the organisation (and most of them probably are). Employee fraud is still a significant problem faced by many organisations.
Ghost employee schemes are frequently uncovered when an auditor, fraud examiner, or other individual distributes paychecks to employees. Missing or otherwise unaccounted for employees could indicate the existence of a ghost employee scheme.
Employees frequently conceal fraud in their individual expense account reimbursements. These reimbursements should be scrutinised for reasonableness and trends, especially in the area of cash transactions on the expense account.
3) Analyse claims history
Submitted a lot of claims during your lifetime, or claimed a lot of losses? Those are immediate red flags, and anything you submit will be closely scrutinised. This is especially true when it comes to homeowners and auto insurance; one of the most popular schemes cooked up by average people is to report their cars missing.
Recognise any patterns in past claims regarding frequency and type. You should keep in-depth records on claims and analyse to interpret the data the claims contain -- everything from figuring out who is most likely to file a claim to when and where.
4) Private Investigators
Like in the films, you could use a private investigator to stake out insurance claimants if necessary. Although you could use less dramatic tactics to uncover fraud, for example: researching claimants' backgrounds, looking through criminal records, interviewing the claimants or any witnesses, inspecting sites, and more.
5) Personal Injury
One of the more popular insurance fraud scams involves vehicle crashes that result in both legitimate and fake/exaggerated injuries. The scam can work in many ways. For example, say you're in a car crash and your back hurts. You go to the chiropractor, who then ends up billing the insurer for non-existent injuries. As an insurer, you end up being part of the scam. So look out for particular claimants submitting numerous injury claims as that can raise a big red flag!
6) Use sophisticated management systems
Fraud often occurs through billing, and quite often for medical claims. Physicians or clinics may bill insurance companies for services never rendered, and for procedures or services that weren't medically necessary.
Complex computer systems have been developed to tease out suspicious bills and billing patterns from physicians and medical establishments. Which is why having a good software system in place is important, as it can benefit you by detecting fraudulent claims.
7) Use social media
Insurers are now using social media to check up on suspicious claims. Perhaps the claimant who said his car suffered hail damage could be bragging about his deception on Facebook or Twitter? Do you think this is likely? Luckily for insurers plenty of their claimants actually do this. A quick look at a claimant's social media could kick start your fraudulent investigation on a particular claimant.
What to do next?
Once your fraud alarm bells are ringing, even if you believe you have a fraudster or a liar on your hands, you need to be 100% sure.
You cannot go around accusing people without evidence, so gather your findings. If you have yet to find evidence that will back up your accusation, there are ways you can set up 'traps' to catch him/ her when they next try to pull the wool over your eyes.
It can happen to any type of business in many different ways, and no business is too small to be targeted. This means that the revenue, reputation and long-term health of your business could be at risk unless you take action.
There are simple things you can do to take control and help protect your business. The most important investment you can make is to take the time to identify where you are at most risk and where to go from there. What you must do next is retain revenue, secure your reputation and protect your business. By following 4 simple steps:
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