An employee overstating the value of a customer refund is committing which type of scheme?

When an employee overstates the value of a customer refund, they are engaging in an overstated refund scheme. This type of fraud involves manipulating refund amounts to create a financial benefit for themselves, often leading to financial loss for the company.

In this specific case, the employee might issue a refund that is greater than what the customer is actually entitled to, which can ultimately result in the employee pocketing the difference or receiving undue benefits. This form of manipulation directly ties to the act of overstating the refund rather than creating fraudulent or fictitious refunds without any real transaction involved, as seen in other types of schemes.

Understanding this scheme is crucial in recognizing how employees may exploit refund processes for personal gain, which is a common tactic in occupational fraud. Recognizing the signs of overstated refunds can help organizations implement better controls and detection mechanisms.