Most Small Businesses Don’t Report Employee Theft

A University of Cincinnati report finds that 64% of small businesses have experienced employee theft, while only 16% of those report the theft to the police.

February 20, 2014

CINCINNATI – A new survey conducted by a University of Cincinnati criminal justice researcher reveals that only 16% of small businesses that have experienced employee theft actually report the theft to the police, reports.

The numbers are striking, considering 64% of the small businesses surveyed reported experiencing employee theft.

"It's important to look at this topic because such theft represents a loss to the tax base and would also seem to put such businesses at risk, and so, put our overall economy at risk,” said Jay Kennedy, who conducted the research. “After all, small businesses with 100 or fewer employees comprise 97% of all businesses in the United States."

The survey’s other major findings include:

  • Theft is a cash business: 40% of thefts in small businesses were of money, and the average amount stolen over time: $20,000.
  • Employees steal over time: most thefts are part of an ongoing scheme, like a bookkeeper that steals small amounts over many years.
  • Most likely to steal: Roughly 60% of employees most likely to steal are first-line employees, those at the lowest hierarchical level.
  • Why the silence: One of the reasons that businesses do not report theft: They do not see the victimizations as serious enough to warrant involving police. It is far easier to simply fire the employee. "For instance, one company went through all the time and steps for a successful prosecution of an employee who stole $200,000,” Kennedy said. “The employee was convicted, put on probation and ordered to make restitution at the rate of $50 per month. In essence, the small business will never recoup the stolen funds."