Service industries all share one common issue – fraud. Sometimes, it’s obvious, but other times, it can go on for years, making fraud prevention difficult.

Of course, types of fraud can vary based on the exact service-based business. However, this ethical problem can ruin a business if it’s not caught quickly.

1. Encourage Customer Feedback

Sadly, some employees in service industries make the customer work for them. They might add small upcharges and pocket the difference. Or, they charge customers for a more expensive item without the customer realizing it. Make your business’s policy well-known to both employees and customers.

If customers notice anything odd, report it immediately. While it could be an honest mistake, frequent issues could point to fraud. Pay close attention to feedback trends for better fraud protection.

2. Audit Payroll

One of the things that makes service industries so popular to work in is flexible hours. However, some employees may take advantage of that. For instance, they might ask for a day off, but promise to work a few extra evenings over the next few weeks to make up for it. But, they don’t come in or they take off early. Since schedules can change so frequently, you might not notice it. However, you’re paying them for time they didn’t work.

Regularly audit payroll to ensure everything looks correct. Each manager can keep track of hours to ensure it matches with payroll data. Also, encourage other employees to report if someone is leaving early or having someone else clock them in and out. Use an ethics hotline to make reporting this easy.

3. Thoroughly Review Injury Reports

A common type of fraud in service industries is fake injuries. This allows employees to take advantage of workers’ compensation and relax at home. However, there’s nothing wrong with the employee or they were injured outside the workplace.

Establish a policy that all injuries have to reported the day they happen. Otherwise, your business isn’t liable. Waiting too long to report is a major sign of fraud. You can also require a hospital visit to confirm the injury is real.

Encourage other employees to report anything suspicious. For example, they might notice a co-worker with a back injury lifting heavy bags of concrete on Facebook to show off their weekend project. This aids in fraud prevention and discourages other employees from trying the same stunt.

4. Incorporate An Ethics Hotline

Theft and financial fraud are issues most every business faces, including service industries. This could include skimming, asset misappropriation, creating fake invoices and more. The best fraud prevention tip to prevent these ethical issues is incorporating an ethics hotline into your business. Thoroughly train employees on how to use it. Also, ensure reports are being investigated.

Another way to prevent this is by having more than one person working together when it comes to finances. An extra pair of eyes helps keep everyone more honest. Plus, knowing they could be reported via your ethics hotline helps reduce the chance of financial fraud in your business.