Table Of ContentFraud Hotlines
Design, Performance,
and Assessment
Fraud Hotlines
Design, Performance,
and Assessment
Chelsea A. Binns
CRC Press
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Library of Congress Cataloging‑in‑Publication Data
Names: Binns, Chelsea, author.
Title: Fraud hotlines : design, performance, and assessment / Chelsea Binns.
Description: New York : CRC Press, [2017]
Identifiers: LCCN 2017016217| ISBN 9781498727433 (hb : alk. paper) | ISBN
9781315370361 (e)
Subjects: LCSH: Fraud. | Helplines.
Classification: LCC HV6691 .B56 2017 | DDC 658.4/73--dc23
LC record available at https://lccn.loc.gov/2017016217
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Contents
Author .................................................................................................................ix
1 Background, Use, and Value ..................................................................1
Introduction ................................................................................................1
Definitions ...................................................................................................2
Background .................................................................................................3
Federal Government ................................................................................3
Private Sector ..........................................................................................3
Nonprofit Sector ......................................................................................5
Value ............................................................................................................6
2 History .................................................................................................11
Pre-2002 (Before and After Sarbanes–Oxley) ............................................11
Adelphia Communications ....................................................................12
Arthur Andersen ...................................................................................12
Enron ....................................................................................................12
HealthSouth ..........................................................................................13
ImClone ................................................................................................13
Tyco ......................................................................................................13
WorldCom Inc. .....................................................................................14
Xerox .....................................................................................................14
2002 ..........................................................................................................15
2008 (Global Financial Crisis) ...................................................................16
2010 (Promulgation of Dodd–Frank) ........................................................20
3 Hotline Design .....................................................................................31
Management and Implementation .............................................................31
Third Party Hotline Process .......................................................................36
Intake ........................................................................................................38
Cost ...........................................................................................................39
Name .........................................................................................................41
Anonymity .................................................................................................48
Accessibility ...............................................................................................55
v
vi ◾ Contents
Advertisement ............................................................................................56
Hotline Rewards ........................................................................................61
4 Performance, Assessment, and Best Practices ......................................65
Benchmarking ..........................................................................................66
Best Practices .............................................................................................71
5 Theoretical Perspectives .......................................................................79
Symbolic Interaction Theory ......................................................................79
Theoretical Analysis ..................................................................................84
Analysis of Fraud Hotline Posters: Most Fraud Hotline Posters are
Simple in Design.......................................................................................84
How Fraud Hotline Posters Can Be Analyzed Under the Theory of
Symbolic Interactionism ............................................................................85
Brief History of Symbolic Interactionism ..............................................85
Basic Tenets of Symbolic Interaction Theory .........................................86
Application of Symbolic Interactionism to Employees and Their
Reaction to Fraud Hotline Posters .........................................................86
How Symbolic Interactionism Informs an Employee’s Motivation
to Report Fraud upon Viewing the Fraud Hotline Poster ......................87
Symbolic Interactionism Explains Why People within the Same
Organization Would Attach a Similar Meaning to an Object ...........87
According to the Theory of Symbolic Interactionism, the Poster
Need Not Be Elaborate to Serve as a Visual Cue ...................................88
Symbolic Interactionism Explains Why the Poster in Itself Is
Sufficient to Prompt the Employee to Report Internal Crime ................89
Theory Relevant to Research Question .....................................................90
Theory of Bureaucracy..........................................................................90
Bureaupathology ..................................................................................90
Current Literature Relevant to the Research Question ...............................92
Bureaupathology and Hotlines ..............................................................93
Crime Concealment ..............................................................................93
Reduced Fraud Reporting ..........................................................................94
Reduced Hotline Performance ...................................................................95
Other Relevant Literature .....................................................................95
U.S. Securities and Exchange Commission’s Hotline and Bureaucracy ......96
Glassdoor Data in Research ..................................................................97
6 Case Studies..........................................................................................99
Introduction ..............................................................................................99
Significance of the Problem .................................................................100
Contribution to the Literature .............................................................101
Theoretical Basis ..................................................................................101
Relevant Literature ..............................................................................102
Contents ◾ vii
Problem Statement ..............................................................................102
Research Question ..............................................................................104
Methodology ...........................................................................................104
Subjects ...............................................................................................105
Design .................................................................................................106
Interviews ............................................................................................106
Threats to Validity ...............................................................................107
Number of Cases .................................................................................107
Self-Selecting Participants ...................................................................108
Descriptive Validity .............................................................................108
Interpretative Validity .........................................................................109
Inter-Coder Reliability ........................................................................110
Variables ..............................................................................................110
Primary Research Question .................................................................111
Independent Variable ..........................................................................111
Dependent Variable .............................................................................112
Sub-question Variables ........................................................................113
Procedure ............................................................................................113
Measurement Scales ............................................................................117
Indices .................................................................................................119
Scales ..............................................................................................119
Case Studies .............................................................................................120
Case Study 1 (PS1) ..............................................................................120
Background ....................................................................................120
Bureaucracy ....................................................................................121
Hotline Specification ......................................................................129
Integrity Hotline.............................................................................129
Hotline Metrics ..............................................................................131
Fraud Metrics .................................................................................133
Historical Context ..........................................................................134
Summary ........................................................................................137
Case Study 2 (PS2) ..............................................................................139
Background ....................................................................................139
Bureaucracy ....................................................................................140
Hotline Specification ......................................................................147
Ethics Hotline ................................................................................169
Hotline Metrics ..............................................................................172
Historical Context ..........................................................................176
Fraud Metrics .................................................................................176
Summary ........................................................................................181
Case Study 3 (GS1) .............................................................................186
Background ....................................................................................186
Bureaucracy ....................................................................................186
viii ◾ Contents
Hotline Specification ......................................................................187
Hotline Metrics ..............................................................................201
Historical Context ..........................................................................201
Fraud Metrics .................................................................................205
Summary .......................................................................................206
Case Study 4 (GS2) .............................................................................210
Background ....................................................................................210
Bureaucracy ....................................................................................210
Hotline Specification ......................................................................215
Hotline Metrics ..............................................................................216
Historical Context ..........................................................................216
Fraud Metrics .................................................................................219
Summary ........................................................................................223
Case Study 5 (GS3) .............................................................................225
Background ....................................................................................225
Bureaucracy ...................................................................................226
Hotline Specification .....................................................................226
Hotline Metrics ..............................................................................231
Historical Context ..........................................................................231
Fraud Metrics .................................................................................238
Summary ........................................................................................239
Case Study 6 (NP1) ............................................................................244
Background ...................................................................................244
Bureaucracy ...................................................................................244
Hotline Specifications ....................................................................246
Hotline Metrics ..............................................................................293
Historical Context ..........................................................................294
Fraud Metrics .................................................................................294
Summary ........................................................................................294
Conclusions ....................................................................................298
Accessibility ....................................................................................299
Information ....................................................................................299
Cost ................................................................................................299
Name .............................................................................................300
Users ..............................................................................................300
Discussion...............................................................................................300
Global Hotlines ...................................................................................309
International Hotline Callers ..........................................................309
Hotline in Senegal ...............................................................................313
Policy Implications ..............................................................................313
Employees Are Rational Actors Who Will Report Fraud ................313
Individual Managers Can Control Excessive Bureaucracy ..............313
Cost Concerns Might Affect Hotline Reporting Levels ..................314
Contents ◾ ix
Managers Can Affect Hotline Reporting Levels .............................314
Conclusion ...............................................................................................315
7 Special Topics .....................................................................................317
Hotlines in the Nonprofit Sector..............................................................317
Methodology .......................................................................................321
Dataset ................................................................................................322
Results .................................................................................................322
Conclusion ..........................................................................................325
Hotlines and Cybercrime Prevention in the Financial Industry ...............325
Introduction ........................................................................................325
Problem Statement ..............................................................................326
History ................................................................................................326
Hotlines and Cybercrime Prevention ...................................................327
Cybercrime Prevention ........................................................................328
The SEC Hotline .................................................................................328
Hotlines and Cybercrime ....................................................................328
Policy Implications ..............................................................................329
Conclusion ..........................................................................................331
Marketing Fraud Hotlines to Prevent Crime ...........................................331
References ...................................................................................................333
Index ...........................................................................................................361
