Eliminating Fraud

Biometrics is a true friend to time, attendance for employers

The challenge of accurately tracking who has worked, and for how long, has exasperated employers for centuries. It is easy to see why—payroll is the single largest cost for most businesses.

A study by the American Payroll Association showed more than 75 percent of American companies are hit by at least one form of payroll fraud. 2017 research found U.S. companies may lose $373 million each year to one of the most common payroll scams. Smaller companies are most at risk as they have fewer resources to cover losses.

If there’s a way for people to scam a system, you can bet someone will find it. Payroll processing systems are no exception. For employers, the challenge is staying one step ahead of scheming employees.

The Old Ways

Pen-and-paper time records can be easily forged or altered, sometimes to the benefit of employers. Mechanical time clocks, in use since the late 1800s and still being used today, were an improvement, but they’re slow and can lead to long lines as employees punch-in at least twice a day. For the past 20 years or so, electronic clocks using ID cards have been popular. Software lets human resources import payroll data, reducing transcription errors, increasing processing speed and accuracy.

Interesting, but where’s the security industry connection? Access control systems have taken on a time-and-attendance role. Access systems note when an employee arrives and leaves the facility using either an ID card or a PIN. Employees are likely to already have a card or PIN for other identification issues.

Cards and PINs can be easily shared, especially for one common payroll scheme known as buddy punching, which involves one employee clocking in and out for another. It might be for an hour, a day or an entire week. A recent survey of 1,000 employees found that 16 percent admitted to clocking in for a colleague at least once.

The key to stopping buddy punching is authenticating that the employee clocking in is the one authorized to carry the card or use the code. That’s where biometrics play a vital role. You’ve probably heard the saying about access control: A card is what you carry; a PIN is what you know; biometrics authenticate who you are.

Only biometrics can’t be borrowed, lost, stolen or learned. Fingerprint, iris and facial recognition systems integrate well with human capital management software, accurately capturing an employee’s daily hours. All take only a second or two to authenticate an employee’s identity. Biometrics are very effective in deterring buddy punching and other payroll fraud schemes—including ghost employees, a situation where supervisors and back office workers create non-existent workers and pocket the pay.

Incorporating Technology

Major manufacturers of time-and-attendance systems have begun incorporating biometrics, typically fingerprint or iris readers. Both technologies record enrollment data then compare it to physical characteristics unique to each employee.

However, there can be problems using fingerprint technology in work environments involving substances such as grease, mud and paint—all capable of obscuring fingerprints. Jobs involving manual labor can result in finger cuts and scars. Both situations lead to frequent rejections and the need for reenrollment. Also, fingerprint recognition is difficult in jobs where employees commonly wear gloves, such as healthcare, food service and warehouses.

Facial recognition technology also has downsides when used for time and attendance, changes in hairstyles, facial hair, glasses, hats and other factors can affect accuracy. However, iris recognition addresses each of those challenges. The technology works only with the iris, the colored ring around the pupil of a human eye. It is fully formed by one year of age and doesn’t change throughout a person’s life. Also, every iris is as unique as a snowflake. Even genetic twins have different iris patterns. Few people can’t use the technology, as most individuals have at least one eye. Blind people have successfully used iris recognition.

Iris recognition works with employees wearing contact lenses, eye glasses and safety goggles and no part of an employee’s body touches the time and attendance system.

To enroll, employees stands about 18 inches from an industry-standard camera and takes a picture of both irises. Integrated software creates a template with more than 240 points of identification. The resulting digital templates can’t be used to produce any type of visual image to spoof the time and attendance—or any other—system. This is not a retinal scan, there are no bright lights or lasers shined into a person’s eyes.

Upon arriving at work, employees stand in front of a reader that compares the iris against those stored on the database. By using multiple readers, employers can eliminate the long lines associated with standard time clocks.

When most people hear about an iris recognition system they might think of it being used at a military base, pharmaceutical manufacturing facility or a high-rise office tower, but iris-based time and attendance systems are being used around the world, often in very surprising locations.

A Case Study

Here’s an example of how systems are being used in remote Turkish fruit farms owned and operated by Anadolu Etap, one of Europe’s largest juice providers.

Time and attendance is a major challenge in an area where employees arrive daily looking for work. If hired, they might work a few days then leave before returning a week or more later. Traditional time-keeping systems are virtually impossible to manage.

The grower’s security integrator recommended trying smart cards. But that wasn’t much help as authorizing, printing, distributing and tracking cards for thousands of on-and-off workers continued the human resources nightmare. Improper use of the cards, such as buddy punching, threatened to cut into the company’s profits.

Next, Anadolu Etap tried fingerprint and facial recognition readers. Scars, facial hair, glasses and protective gear ruled out those technologies. This is when iris recognition technology got its chance, but there were still challenges to overcome.

The system had to be easy for workers to learn and use. It had to work in bright sunlight and in the wide temperature extremes found in open fields. Those fields suffered frequent power blackouts and the system needed to send daily time reports to Anadolu Etap’s Istanbul headquarters.

During field tests workers had no problems using the system. Small, three-sided shelters protected readers from direct sunlight. The integrator installed heaters for the occasional cold morning. The installation of uninterrupted power supply (UPS) units eliminated blackout concerns.

In the Field

A wireless wide area network installed in each field communicates with company headquarters via satellite. Using the WAN and the biometric system’s integrated software, daily reports were received and linked with the grower’s human resources module to automatically calculate payroll.

Once a worker is in the system, it doesn’t matter how often he leaves and returns. The system immediately recognizes him. Anadolu Etap now has more than 10,000 enrolled workers, with more being added almost daily.

Iris recognition systems still remain a top choice for protecting sensitive locations and national identity, voter registration and border crossings around the world, but recent reductions in both product and deployment costs have made using the technology a practical time and attendance investment for organizations of almost any size and in any location.

This article originally appeared in the March 2018 issue of Security Today.

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