Embezzlement is considered a crime of opportunity, but whether premeditated or not, these latest embezzlement statistics show it costs businesses millions of dollars every year. No business, big or small, is entirely safe from embezzlement.
Employee theft can occur across all industries, although the finance sector is the most vulnerable. Some steal for personal reasons, while others believe they’re underpaid.
Let’s take a look at the numbers behind these types of wicked crimes that occur today.
Latest Facts & Numbers on Employee Theft & Embezzlement Cases (Editor’s Choice)
- 75% of employees were involved in embezzlement
- An embezzler has worked in a company for approximately eight years
- 4% of embezzlers had prior convictions in 2020
- Embezzlement impacts around 95% of businesses
- Around 80% of church theft is unreported
- Over 20% of embezzlement schemes involve cash skimming and check fraud
- Embezzlement costs small businesses almost $300,000
- Globally, there were over 2,500 cases of embezzlement in 2020
Embezzlement Statistics for the US
Embezzlement is a diverse crime. In the United States, workplace crime costs billions of dollars a year to businesses and corporations alike, leaving a lasting impact on the economy. Higher anti-fraud protocols are becoming the norm in the US in order to prevent this costly crime. Still, the numbers might surprise you.
1. 75% of employees have committed embezzlement.
While the number of cases of employee fraud are decreasing in the United States, three-quarters of employees have admitted to stealing at work. It’s estimated that businesses lose 50 million dollars every year due to money embezzlement, which amounts to 7% of total revenue lost.
2. 95% of businesses are hurt by embezzlement.
There are many different types of embezzlement that occur over different types of industries, but studies show that there is no industry that is left untouched. Whether it be through committing time fraud, illegally gifting items to loved ones or straight-up stealing from the cash register, businesses are feeling the impact of employee theft.
3. An average embezzlement case lasts for about two years.
Employee embezzlement cases aren’t just a one-time occurrence. Reports show that once an employee has embezzled once, it is very likely that they will do it again. According to the Hiscox study, an average embezzlement case lasts for two years, with 70% of cases lasting more than a year and 31% lasting more than three years.
4. More than half of companies recover less than one-third of lost funds.
Studies show that being unable to recover lost funds isn’t the only cost of embezzlement to companies. Once public, the credibility of a company is greatly impacted by employee theft, especially in financial industries. Corporate embezzlement cases showed the greatest detriment was to credibility, with many companies losing business partnerships and customers.
5. The average embezzler works for a company for eight years.
Cases show that most employees don’t apply for jobs in order to embezzle from a company, but rather it’s a gradual process that occurs either because of a personal financial crisis or because the person becomes disgruntled.
6. In 46% of cases, three employees are responsible for this crime.
While it may seem that this crime of opportunity is committed by a lone employee tempted by opportunity, embezzlement cases show that in almost half of cases, more than three employees are involved. With 24% of employees stating that they steal because they can get away with it, finding others to run more complex schemes may not be as hard as it seems.
7. Managers commit 85% of employee theft.
Chief financial officers, controllers, and accountants are most likely to commit embezzlement and fraud more than any other employee due to their superior role and access to greater financial processes. Whether because of access to financial records that they can alter, or a greater sense of trust developed by employers, financial fraud is more likely to be the one you put in charge.
8. 42% of embezzlement cases are reported by a tip.
While the numbers can be discouraging, there are honest employees out there. In the case of employee fraud, usually another worker will notice that money is missing and will report it. Just under half of employee embezzlement cases are discovered and legally charged.
9. Billing fraud, cash on hand, and theft and larceny are among the top 5 most common embezzling methods in the US.
Inaccurate reporting is the most common embezzling technique in 18% of cases, while 15% of the time, embezzlers take cash on hand. Theft and robbery occur 11% of the time, while other standard methods include accounting embezzlement cases such as check and payroll tampering, skimming, and cash larceny.
10. Embezzlement is the reason for 33% of businesses going bankrupt.
(Total Security Advisor)
While many cases of embezzlement occur in large financial corporations with sometimes millions of dollars at stake, small businesses with less than 100 employees are hit particularly hard by employee theft. Due to the immense cost and lack of resources for litigation, 33% of businesses go bankrupt as a result of embezzlement.
Church Embezzlement: The Easiest Kind of Fraud
Even though many have faith in their pastors, statistics say that embezzlement is an easy crime to commit in churches. With little regulation and monitoring, only one person responsible for funds, and increased faith in workers and volunteers, it turns out churches are the easiest place to embezzle money.
11. 80% of church theft goes unreported.
According to church embezzlement statistics, pastors are often the most trusted people in the community. As a result, even blatant cases of embezzlement by pastors and preachers goes unnoticed by the conjugation.
12. Fraud against churches is set to reach $80 billion by 2025.
Researchers report that due to the lack of regulation and unbiased auditing in church organizations, the cost of financial fraud will continue to increase. In many cases, churches experience embezzlement by an employee as finances are handled by just one person, and as such, without proper regulation, financial fraud becomes an easy opportunity.
13. 60% of churches don’t have ways to report the crime.
Lack of proper processes for auditing and reporting are a major reason why stealing from churches is so widespread. While many choose to trust and hold the church to a higher standard, there is no evidence to suggest that church-goers and preachers are any less likely to steal than other employees.
Small Business Embezzlement: The Little Company Death Sentence
Small businesses are not immune to employee theft, but the consequences can be much greater. With less capital to press charges and perform regular audits, small businesses can be particularly vulnerable to embezzlement. law
14. Embezzlement costs small businesses $290,000.
Small businesses owners are less likely to suspect their employees of theft as working in smaller atmospheres tends to lead to deeper trust between employer and employee. Still, a recent study showed that it happens in companies with under 100 employees 55% of the time, and can cost a small business up to $290,000.
15. Small business embezzlement cases are instances of corruption 32% of the time.
(Business Fraud Prevention)
Corruption is considered the biggest contributor to embezzlement cases in companies with under 100 employees. Corrupt activities involve cases of bribery, illegal gratuities, conflicts of interest, and economic extortion. This crime is even more prevalent in larger companies, accounting for 42% of embezzlement cases.
16. 37% of money embezzlement cases in small businesses occur in the finance and accounting department.
While embezzlement can happen in any department of a business, finance and accounting departments of small businesses are the most vulnerable. With fewer employees and leaner regulations, a single person can be responsible for keeping books and record taking, leaving an opportunity to commit theft without notice.
Global Embezzlement Statistics
Embezzlement happens all over the world, but it’s strongly correlated with the type of industry. Financial institutions continue to be the leading industry for financial fraud due to the regular contact with large amounts of money and opportunities for substantial financial gain through theft.
17. There were 2504 cases of embezzlement worldwide in 2020.
In 2020, $3.6 billion were lost due to embezzlement worldwide. The prevalence varies based on the industry, however. In the first place, the world saw 338 cases of financial and bank embezzlement, while manufacturing came in second place with 201 cases. Government and public administration had 184, while healthcare and retail companies had 149 and 104 cases.
18. Male employees are more likely to commit embezzlement.
Men are not only more likely to commit financial fraud, amounting to 72% of all embezzlement cases worldwide, but they are also more likely to cause greater losses than women. In 2020, men contributed to $150,000 median losses, while women accounted for $85,000.
Based on embezzlement demographics, in the Middle East and North Africa, more than 9 out of 10 male employees will commit employee theft, compared to North America with 64%.
19. The average age of employees who commit occupational fraud is 48.
The older an employee, the more likely it is that they will commit employee theft. In the younger generations, just 5% of embezzlement cases, the employee was under the age of 26, with a median loss of $23,000. Embezzlement facts show that older employees usually hold higher positions, with increased access to financial books, processes, and opportunities to steal. The median loss for employees over the age of 36 who commit embezzlement is $100,000 to $200,000.
20. Embezzlers with a postgraduate degree caused an average loss of $230,000.
Looking at the likelihood to embezzle by educational background, the second-highest median loss is correlated to employees who have a post-doctorate degree. Post-doctorates have the highest median number of cases, with approximately 47 reported per year.
Judging by these numbers, background checking services sure do come in handy in situations when an employer needs to hire new personnel, even if the candidates hold a higher education.
21. In 2020, only 4% of embezzlers had prior convictions.
According to the 2020 study about the misappropriation of money, 89% of perpetrators have never been charged, sued, or convicted of a crime before their embezzling crime. 6% had been arrested but not convicted, and only 4% had prior convictions.
22. External audit of financial statements is the most common anti-fraud control in the Asia-Pacific region.
Applying anti-fraud regulations is a primary defense against embezzlement. Implementing external auditors is a primary prevention technique to ensure unbiased checks on financial and company processes. Notably, one-third of frauds occur due to lack of internal control procedures.
Common Embezzlement Schemes
Embezzlement isn’t just one type of scheme but rather encompasses various different avenues employees can take to commit fraud. The opportunities available depend greatly on the position of the employee in the company, rules and regulations, and the industry of the company.
23. Employee time theft amounts to 4.5 hours per work for every business.
Money might be the most obvious way to steal when theft is involved, but studies show that time theft is a major concern to most companies. Many cases of employee embezzlement occur when an employee leaves early without reporting it, doesn’t clock out for breaks, or reports they have worked more hours than they did, they have effectively committed time-theft.
24. 22% of embezzlement schemes involve check fraud and cash skimming.
(Insurancejournal Sqnbankingsystems Aetonlaw)
Check fraud and cash skimming accounts for more than one-fifth of embezzlement scams. Writing fraudulent checks for personal gain or taking small amounts of money from tills and transactions are ways in which this type of crime can take place.
25. The most frequent cash embezzlement schemes include short-changing customers and refunding stolen items for cash.
Employee embezzlement occurs most frequently during cash exchanges between employee and customer. Shortchanging customers occurs when customers are given the wrong amount of money back, or alternatively, when the employee doesn’t put the received payment into a till, vault or container and retains it for personal gain.
26. Most common credit account embezzlement schemes include ghost employees for payroll.
The most common way for employees to commit credit account fraud is by tampering with payroll, most often by creating ghost employees. Notably, billing and payroll fraud occurs twice as much in small companies than larger ones.
Employee embezzlement statistics that both corporations and small businesses can become victims of embezzlement. This type of crime covers various acts by both company CEOs and low-level employees and costs billions of dollars worldwide.
The vast majority of employees have committed occupational theft, and many report that they would if they believed they could get away with it. Small companies are particularly at risk, as they often lack the resources to institute proper anti-fraud measures or afford litigation should it be discovered.
Improving regulations and implementing external audits is a proven way to reduce the incidence of this type of crime by either preventing it completely or catching it before it causes detrimental losses.
People Also Ask
Embezzlement is more common than you think. 75% of employees have committed theft, and 95% of companies have been victims of embezzlement. An average case lasts for about two years, leaving space for immense losses. Small businesses are more likely to suffer from embezzlement than corporations, but other institutions, like churches, happen to have high rates as well.
The first thing to do is to pay attention to the employee’s behavior. If they steal, chances are they’ll spend more than they earn or display substance abuse. If you suspect someone is stealing from your company, discuss it with the legal team, and conduct in-depth financial control to find any suspicious activity. Bring in outside advisors, and focus on not alerting the employees.
Employee theft is defined differently across the US. In some states, it’s classified as a misdemeanor, in others as theft in various degrees. Based on its definition, the punishment for embezzlement is different, and they depend on the state and the amount of embezzled funds. Penalties include a fine and imprisonment. In some states, stealing more than $500 in funds of property is punishable. In others, it’s $20,000.
Check frauds and cash skimming are the two most common forms of embezzlement. Embezzlers can use physical or digital checks to obtain money. Sometimes they’ll also forge a check or fill it out on the wrong name. Cashiers and bartenders are likely to commit cash skimming by not ringing in a sale and taking the money instead of putting it in the cash register.
Defined as a type of financial fraud, embezzlement is a statutory offense. This means that, depending on the circumstances, it can be a crime under state or federal law or both. What makes the difference is the amount of embezzled money or the value of the property. Still, since the definition depends on the state, the penalties vary as well. If you’ve read our embezzlement statistics and you’re worried your business might be in danger, consult with your lawyer.