The holidays are here! It’s that wonderfully busy time of year when we’re managing family schedules, finalizing vacation plans, and, if you own a business, managing the year-end rush. It’s all about the spirit of giving, the joy of the season, and hopefully, a bit of much-needed rest.
But, in the rush to close the books, hire seasonal help, and fulfill those last-minute orders, business owners face a heightened risk that rarely gets talked about: employee dishonesty. It’s the business equivalent of finding coal in your stocking—only that coal is actually missing cash or stolen inventory.
The solution? A fidelity bond. They act as your business’s ultimate security blanket, ensuring that even if an employee makes it onto the Naughty List, your company is protected from the financial fallout.
The Three Seasonal Risk Factors for Employee Dishonesty
We all know the holidays bring good cheer, but they also bring three major disruptions to normal business operations. These disruptions are exactly what create opportunity for internal financial mischief, and a 20% spike in fraud during the holidays.
1. Increased Staffing Creates Greater Vulnerability
Think about your home during the holidays. When you have guests visiting, the doors are opening more frequently, and things might not be as perfectly organized as they usually are. The same is true for your business when you bring on seasonal staff.
Many businesses hire quickly to manage the retail rush or fulfill massive e-commerce orders, and less than 7% increase their fraud protection for the holiday season. Background checks might be expedited, training is often minimal, and new faces are suddenly handling sensitive areas like cash registers, inventory, and shipping manifests. This surge in temporary personnel increases the risk of employee theft of both merchandise and money.
When you look into what is a fidelity bond, you find that it is specifically designed to cover this kind of risk, protecting your company’s assets regardless of how long the dishonest employee has been on the payroll.
2. High Transaction Volume Hides Smaller Crimes
From November through January, transaction volume often explodes, making up an average 19% of total annual sales. Retailers are ringing up hundreds of sales, e-commerce sites are processing thousands of credit cards, and service businesses are closing large year-end contracts.
This high-volume chaos is the perfect hiding spot for minor acts of fraud or misappropriation of funds. A small amount skimmed from the register here, a few items pocketed there—it gets lost in the noise of peak sales. Since business processes are rushed, an employee can try their luck, betting that nobody will notice until well after the holidays.
The existence of a fidelity bond ensures that even small losses add up to a manageable claim, rather than an unrecoverable deficit.
3. The Year-End Financial Rush is Prime Time for Big Fraud
Perhaps the biggest risk is internal. As accountants and finance teams rush to finalize ledgers, send out bonuses, and reconcile invoices before the new tax year, controls can slacken.
This is prime season for a sophisticated, trusted employee to try and execute a scheme. This includes things like funds transfer fraud, where an employee might trick a colleague into sending a large wire payment to a fraudulent account disguised as a trusted vendor, or falsification of records to cover up embezzlement. The urgency of year-end deadlines makes these large financial transfers easier to pull off..
The Comfort and Joy of Your Fidelity Bond
So, what exactly does this coverage do for you? A fidelity bond is not an option; for many businesses, it’s an essential shield.
It is fundamentally different from a general liability policy. General liability covers you when a customer slips on a wet floor (an external event). Your fidelity bond protects you when your own employee commits a dishonest act (an internal event).
Fidelity Bond: The Key Coverages
Your policy provides a safety net against a wide range of internal misdeeds:
- – Employee Dishonesty: This is the core coverage. It protects against financial loss resulting from the fraudulent or dishonest acts of your employees, regardless of whether they are full-time, part-time, or seasonal.
- – Theft of Money and Securities: If cash is missing from a safe or register, or company checks are forged, your bond covers the loss.
- – Computer Fraud: This addresses losses resulting directly from the use of a computer to fraudulently transfer money, securities, or property from inside or outside your premises.
- – Social Engineering Fraud: This covers losses that occur when an employee is tricked into voluntarily transferring funds based on fraudulent instructions, often via email (a common scam during the busy holidays).
A Secure New Year
The rush of the holiday season means less time to worry about paperwork and internal security. As you secure your home for the winter and plan for your family’s festive activities, take a moment to secure your business, too.
Don’t let employee dishonesty become the unexpected, devastating surprise of the New Year. The expense of a loss from employee theft often far exceeds the cost of a fidelity bond premium, with the median fraud case last year costing $145,000. While you may be focused on things like auto insurance claims or property maintenance at this time of year, remember that internal risks are just as real.
What is a fidelity bond? It’s simply peace of mind. It’s knowing that you’ve done everything you can to protect the business you’ve worked so hard to build.
Get Your Year-End Review
Is your current coverage limit sufficient for your peak holiday inventory? Does your policy fully cover digital risks like computer and social engineering fraud?
Before the clock strikes midnight on December 31st, review your business coverage needs. We can help you customize fidelity bonds and Commercial Crime policies to ensure your business enters the new year secure, protected, and fully compliant. Let us worry about the “Naughty List” so you can focus on the “Nice.”
When you’re ready to review your fidelity bond, you can reach out to our team at Ashland Insurance online or give us a call!
541.482.0831 Ashland
541.857.0679 Medford