Safeguarding Success: The Crucial Role of Credit Checks in Preventing Employee Fraud

As a CEO, a feeling that’s worse than losing money to financial fraud is finding out the person committing these acts is someone from your own company. This situation can be a significant blow to a company’s financials and unfortunately, such incidents are all too common. Consider the case of a former accountant at a Hong Kong watch company who embezzled nearly HK$11 million over a seven-year period.¹  Another instance involves a law firm accountant who stole HK$2.4 million from their employer.²

To combat employee financial fraud, understanding a candidate’s financial stability becomes a critical component. Beyond managing financial resources effectively, stability encompasses steady income, minimal debt and a good credit history. Employees who are financially stable are less likely to be distracted by financial worries and engage in fraudulent activities or theft, making them a more reliable and trustworthy workforce.

TransUnion’s latest study surveying 300 HR professionals revealed companies not only suffer direct monetary losses but also face indirect consequences, including reduced employee confidence (36%), higher turnover rates (30%), decreased productivity (23%) and loss of client trust (23%). All these are very real implications of theft or fraud. In Hong Kong, 18% of organisations encountered cases of debt or financial misconduct.³ So, what can organisations do to prevent these incidents from happening to their own companies?  

By implementing credit checks, both at onboarding and as a regular practice during an employee’s review process, employers can verify candidates’ reliability for delinquent accounts and public records, such as bankruptcies and winding-up petitions, thereby preventing potential employee theft or embezzlement. Low credit scores and high credit utilisation rates are typically markers of financial distress. Employers should carefully consider their decisions before hiring for positions that are responsible for company money or consumer information. 

Credit checks emphasise the importance of upholding corporate integrity through thorough hiring practices. It also promotes a culture of financial responsibility within the organisation, encouraging employees to maintain good financial health — which can contribute to their overall well-being and job performance. This can be particularly important in industries where financial decision-making and integrity are crucial.

By conducting credit checks throughout the hiring process and as a regular practice, companies can identify potential patterns of financial instability in candidates. Solutions like TransUnion TruEmpowerᵀᴹ Credit Report for Employment offer a proactive approach, enabling businesses to better mitigate risks and prevent losses linked to unethical employee behaviour. As organisations continue to grow, it’s important they safeguard themselves from future liabilities.

Contact us to learn how TransUnion solutions can empower organisations to make decisions quickly and confidently when considering potential candidates or re-evaluating current employees.