July 21, 2021 by Samantha Hoppe

What is Red Collar Crime?

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Red collar crime is a subgroup of white collar crime in which the perpetrator uses violence to avoid detection or prosecution. Although red collar crime appears to be a rare event in the U.S., this is not necessarily the case, and it is advisable for businesses to have a process through which white collar crime can be reported anonymously.

The term “white collar crime” is usually identified with financially motivated, nonviolent crimes committed by employees against their employer, or by individuals against a financial institution. The crimes typically consist of forgery, insider trading, fraud or embezzlement, and are estimated by the FBI to cost U.S. businesses more than $300 billion per year.

Nobody really knows the true cost of white collar crime because not all white collar crimes are detected. Furthermore, when they are, only 54% of white collar crimes are reported to law enforcement agencies according to the Association of Certified Fraud Examiners in their 2020 Report To The Nations, who also claim businesses on average lose 5% of their revenue each year to fraud and that 43% of white collar crimes are identified via a tip rather than via an internal audit or investigation.

When White Collar Crime Turns Red

When white collar crimes are detected, the most common outcome is an admission of guilt and – depending on the nature and severity of the crime – a custodial sentence, a financial settlement or disciplinary action. However, when the perpetrator doesn’t want the nature of his actions disclosed, the outcome can be much different.

Around 50 recorded cases have occurred in the past 30 years in which the perpetrator has either murdered the person who discovered their crime or paid somebody else to do it. Many of these cases were reviewed by Frank Perri – a criminal psychologist at DePaul University in Chicago – to develop psychological profiles of offenders who commit red collar crimes.

Perri’s results were published in the International Journal of Psychological Studies in 2016, and they make a fascinating read. His review of the cases found red collar criminals typically harbor behavioral risk factors that lead them to use violence as a solution to a perceived problem, in the same way as non-white-collar offenders resort to violence.

The Extent of Red Collar Crime is Unknown

In the same way as nobody really knows the true cost of white collar crimes, the extent of red collar crime is also unknown. There could be many dozens more murders attributable to the cover-up of white collar crime; but, because the white collar crime has remained undetected, the connection is never made. Conversely, a murder could go undetected when a white collar crime has been discovered. And sometimes, white collar criminals turn on white collar criminals. 

How to Prevent Red Collar Crime

The best way to prevent white collar crime – and by association, red collar crime – is for businesses to have a process through which white collar crime can be reported anonymously. As mentioned above, 43% of white collar crime is detected by tips, and anecdotal evidence suggests this figure is considerably higher when employees can alert businesses to fraud anonymously.

Implementing an anonymous tip service has more financial benefits than just alerting security personnel to internal fraud. The Association of Certified Fraud Examiners found that losses attributable to white collar crime were 50% smaller for businesses with a tip service, and also that these businesses were less exposed to fines for regulatory noncompliance because they had controls in place to prevent fraud.

For businesses that do not yet have an anonymous tip service in place, another potential solution is an employee safety app. The mobile app supports two-way anonymous tip texting and has personal safety features such as the virtual escort that can help protect lone workers.

Find out more about implementing an anonymous tip service or protecting employees with employee safety apps.

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