What is a Whistleblower Hotline?
A whistleblower hotline is an anonymous, confidential line of communication that companies can set up to allow their employees, vendors and customers to safely report fraudulent, dangerous, unethical or illegal activity occurring in the workplace. While normally associated with a dedicated phone number, whistleblower hotlines can include other forms of communication, including an anonymous email address or customized internet page. According to the Association of Certified Fraud Examiners, whistleblower hotlines provide the most effective and cost-effective tool in the fight against fraud and other potential problems within a business.
The Sarbanes-Oxley Act
Whistleblower hotlines have become more widely used since the Sarbanes-Oxley Act of 2002, passed by Congress in response to several corporate financial scandals that were exposed by whistleblowers. The Sarbanes-Oxley Act contains a number of provisions aimed at creating transparency and protecting investors. The Act’s whistleblower protection provisions require publicly traded companies to establish an anonymous and confidential procedure for employees to voice concerns. While public companies are required by law to have a whistleblower hotline, private companies and other sectors of the economy, including schools and non-profits, have also successfully adopted whistleblower hotlines. Some companies have even used hotlines to address human resource concerns and other issues beyond financial malfeasance.
The Sarbanes-Oxley act requires whistleblower hotlines to be “confidential” and “anonymous” for good reason. Anonymity encourages employees, customers or vendors to report disingenuous activity without fear of reprisal or retaliation. A study released around the time of the Act’s passing “determined that 1 in 5 American workers possesses personal knowledge of workplace fraud and 39% of all workers would be more inclined to report fraud if they had an avenue to remain anonymous.” Although companies may set up their own whistleblower hotlines, these “internal” hotlines can make the reporting system seem non-anonymous, thus deterring employees, customers, and vendors from reporting complaints. Instead, experts agree that the best practice is to use an external, third-party hotline to protect anonymity and to ensure that the hotline is an effective means to address company concerns.
Making a Report
When a whistleblower contacts a reputable third-party whistleblower hotline, the caller speaks with a highly trained representative who has passed a stringent certification program. The representative is well versed in interview techniques that are used to obtain accurate, objective complaints. After conversing with the whistleblower, the hotline service uses confidential means to communicate the whistleblower’s complaints to the business’s management or executive committee. The representative will then follow up on the complaint and report the results back to the business. This process ensures that the employee remains anonymous; that the information is verified, relevant and specific; and that the business receives an objective report of employee concerns.
How Whistleblower Hotlines Benefit Businesses
While public companies are required by law to have a whistleblower hotline, setting up a hotline is beneficial for any company. Whistleblower hotlines can help prevent potential problems from becoming bigger problems. A 2011 survey of forensic and valuation accountants cited “internal tips . . . as the most common detection method for frauds that occurred at their organizations.” In 2014, the Association of Certified Fraud Examiners noted that fraud is “detected fifty percent more quickly when a hotline is in place.” Addressing these issues early on helps businesses to avoid further loss, the costs associated with investigation or, potentially, litigation and even damage to the company’s reputation. After all, it is better to have this information come to the business directly rather than being reported outside of the company before management has a chance to address the problem. In addition to preventing financial losses, hotlines are also useful tools for detecting and combatting against human resources issues such as harassment or discrimination.
Furthermore, whistleblower hotlines work to create an ethical and compliant work environment by setting the tone and sending a clear message about unethical conduct. Having a hotline in place also builds employee morale. With a well-publicized hotline available, employees gain trust in their company and are willing to speak up without fear of reprisal if they see something that can be damaging to the company’s profits, work environment or reputation.
With the help of a third-party answering service, setting up a whistleblower hotline involves little cost, and the hotline can be ready to take calls immediately. If you are interested in establishing a whistleblower hotline, contact Responsive Answering Service. Responsive Answering employs highly trained, multilingual representatives and offers many different reporting channels, including phone, fax, customized internet pages, and anonymous email service.