Not all tips are created equal; two-way communication makes the difference
Occupational fraud costs U.S. businesses more than $660 billion each year, according to the Association of Certified Fraud Examiners. That’s a staggering amount of money. The group’s “2004 Report to the Nation” found that the median loss for insurance fraud ($172,500) was considerably higher than the median losses in industries like banking ($101,000) or retail ($31,000).
Insurers seeking to minimize losses need tools that have proven their effectiveness in fighting fraud.
One of the most powerful fraud detection tools available is an anonymous hotline. The ACFE study found that organizations without an anonymous reporting mechanism lost twice as much to fraud as their counterparts who invited anonymous tips.
The study also found that tips were the leading method for detecting fraud–well ahead of activities like internal audits. Clearly fostering tips is in the best interest of the bottom line.
It is important to understand that all tips are not created equal. The quality of a tip can be improved through two-way communication, which generates more detailed information than one-way communication.
For example, an anonymous note may simply say that Bob is filing false claims. Without Bob’s last name, his location or more information about the false claims, this tip will be nearly impossible to investigate.
An interview conducted by a well-trained, experienced interviewer will delve into details about the activities that will become the basis for an investigation.
The need for an interactive conversation is especially important when dealing with an anonymous caller, because there may never be another chance to gather information.
An anonymous caller often feels threatened and can be emotionally volatile. Because of this, he or she may give information in a disorganized manner and may leave out important details.
An experienced interviewer will help the person organize his or her thoughts and will ask appropriate questions to paint a complete picture of the situation.
The need for two-way communication leads to the issue of 24-hour hotline availability. Nearly half of hotline calls happen outside of regular business hours, and each call deserves equal treatment.
A person who is anxious about making an anonymous tip usually won’t leave a message, because he does not want his voice recorded. If he does leave a message, it is likely to be as brief as possible, which means the information will probably lack detail.
The best way to ensure your hotline yields actionable information is to have an experienced interviewer available 24/7. The risk of operating a part-time hotline is that someone may gather the courage to report fraud and find no one is there to answer the call, leaving the company unable to investigate the situation.
Once a tip has been received, the next critical step is making sure the appropriate people quickly learn about complaints that pertain to their area. Most hotlines receive a wide variety of tips that require different levels of response.