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Question & Answer
Question: We're thinking of starting an incentive/reward program for our branch people if they catch or stop a fraud. I understand it has been done pretty successfully in other financial institutions. Can you tell me if there is a standard reward program structured. We're not sure how much is right or fair to offer our tellers.
Answer: We made a few phone calls to security officers we know are using such a program, and came up with pretty standard figures. And we also learned that most programs go beyond the branch. Operations has some pretty sharp people who recognize frauds. They are, in some cases, also included in the program. The guidelines we found were:
Prevented loss of $100 to $250 = $25
$250 to $500 = $50
$500 to $2500 = $75
$2500 to $5000 = $150
Over $5000, 3% of the prevented loss amount with a max of $500
One caution. One bank we talked to said they were changing their rewards to vacation time in hours, partial days or whole days or a gift choice from catalogs, due to tax requirements. Their tax people said any rewards had to be considered income. You may want to increase the amounts to cover tax, or take it out before presentation (not a popular choice, from our survey). But at least be aware of it.
Copyright © 1999 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 9, No. 8, 9/99
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