Why Good People Still Commit Fraud

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With all of the financial scandal of the last decade, it made me wonder why it is that people still behave in an unethical manner. Is it because they really just care about profits and don't care who gets hurt? Are they selfish monsters? Did they just makes a few mistakes? Are they just bad people?

It's easy to just assume that people who commit fraud are bad people who lack ethics. The truth, as usual, is much more complicated.

According to a recent program at NPR, the reasons that people commit fraud or behave in unethical ways are complex, and the choices are often motivated by good intentions. They shared a story of a man who had been convicted of fraud and discussed the process of how the decisions were made. What they had to say was surprising.

In the story, we realize that everyone is capable of behaving in very unethical ways. In fact, most of us do it all the time. Here are the steps:

The slippery lie - First, we lie to ourselves and come up with a reason why we need to lie. We tell ourselves that it's just one small lie for the greater good. Even with the best of intentions, it's not too hard to convince yourself that it's only "a little wrong".

We don't always see the big picture - Talking about ethics is one thing, but in real life situations, we don't always see the ethical big picture. Instead of asking hard questions and thinking about the consequences of our actions, we simply react to things and try to find a way to make things better. For example, if I asked you a question like, "If your boss asked you to lie on an official document, what would you do?" When we are talking about ethics, most people would say that they wouldn't lie for their boss. However, most fraud cases show that employees often help their bosses by lying on forms. The problem is that when the boss tells them that the company is in trouble and they need them to help, the employees trust their boss. They want to help and rarely say no.

Fraud is contagious - Once you start behaving in an unethical manner, it becomes important to have others help you. This means that other, trusted people, will be asked to commit fraud themselves. Because people want to help and are taught to be nice, most of the time, they will assist a trusted friend or boss, even if they they have to lie. For example, a study showed that emission testers passed between 20 to 50 percent of cars that should have failed. When researchers looked into the data, they found that people who drive older, cheaper cars were more likely to get a pass when they should have failed than the more expensive car owners. Was it discrimination? Not at all. The emissions testers were more likely to empathize with the people that drove older cars, like they did, and want to help them out by giving them a pass. What's more, the emissions testers don't think that they are doing anything wrong.

It's hard to keep the lie alive - Once someone is in over their head, keeping the lie going takes a lot of effort. Getting caught is almost a relief, because the guilt and stress can eat someone alive. From there, the person who started the fraud has the weight of the other well-meaning people who helped on the their shoulders as well.

Anyone can commit fraud. The important thing for financial institutions and others is to make an effort to understand the reasons for the behavior and build in ways to make fraud less tempting.

What do you think? Do you think people who behave unethically are just bad people?



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  • Melissa Kennedy
    Melissa Kennedy
    @Julie - I think you're right, there should be some sort of support or education for these sorts of things. It always amazes me how one employee will be so honest about the "tricks" they use to get away with things. Then, once they tell you, reporting them only makes you appear to be a snitch, even though you're only trying to protect the company and ensure that the job is being done correctly. Also, management doesn't always support the new employee who decided to blow the whistle on conduct that has been going on for a long period of time.
  • Julie C
    Julie C
    they might have a difficult personal situation or weak will but I think there should be support and education about these feelings. I work in security and I am leaving a job because there is no integrity. A 24 year old employee who has credibility admitted to me that he writes on his reports that he checked emergency doors but he did not verify them.I felt very annoyed and that I had to denounce especially when the so called supervisor tried to blame me because the same night, another agent put on her report that she found the door unlocked and its not the first time.  I was frustrated that they chose to blame me the new employee who really did my job well but  the older employee has not even been asked I think. So I think, its bad when credibility overpowers reality.

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