Overcoming implicit bias in anti-fraud investigations

Before Elizabeth Holmes was convicted of fraud in 2022, the Theranos CEO was known as a young, charismatic, highly educated woman who dazzled millions with the expectation that her blood-testing technology would revolutionize health care. She garnered high-profile investors and appeared on magazine covers that heralded her billionaire status. But Holmes’ story eventually unraveled, and her technology was exposed as a fraud. Holmes fooled so many for so long because she relied on people’s perceptions of successful entrepreneurs. She emulated her hero, Apple co-founder Steve Jobs, down to his signature black turtlenecks. As Financial Times editor Gillian Tett wrote, Holmes, as a rare female CEO in a male-dominated industry, had a “halo effect,” especially for people who wanted to see women succeed in tech. (See “What Elizabeth Holmes taught me about gender bias,” by Gillian Tett, FT Magazine, Dec. 4, 2019.)

People might’ve been willing to overlook red flags about Holmes because she appealed to their biases and confirmed their worldviews. Everyone has a lens through which they approach the world, developed through culture, personal experience and other factors. Our personal experiences make us who we are, but fraud examiners must ensure these experiences don’t harm the integrity of their investigations. As the Fraud Examiners Manual states, “… an interviewer should lack bias.” (See “Characteristics of an Effective Interviewer,” Fraud Examiners Manual, Section 3: Investigation, 2022 Edition.) But working to overcome bias isn’t always easy. How can fraud examiners ensure that their biases won’t influence their investigations? As with most skills, it’s something you must develop and requires that you first recognize you have them.

Recognizing implicit bias

Jennifer Eberhardt, a psychology professor at Stanford University, wrote in her 2019 book “Biased: Uncovering the Hidden Prejudice That Shapes What We See, Think, and Do,” that the human brain doesn’t like chaos, so it works to categorize everything, including people. But this process of categorizing leads to mental mistakes — biases — that affect thinking and action. Biases help make sense of the world, but they can cause people to seek information from bad sources, look for confirmation of existing beliefs or misremember events. (See “What Police Departments and the Rest of Us Can Do to Overcome Implicit Bias, According to an Expert,” by Belinda Luscombe, Time, March 27, 2019 and “How to Think About ‘Implicit Bias’,” by Keith Payne, Laura Niemi and John M. Doris, Scientific American, March 27, 2018.) However, most people don’t realize their biases; they’re unconscious, implicit. According to the National Institutes of Health, implicit bias occurs automatically and unintentionally, and it affects judgments, decisions and behaviors. (See “Implicit Bias,” National Institutes of Health.)

“The dangerous thing about implicit bias is that it operates on an unconscious level,” says Bret Hood, CFE, a former FBI agent and financial crimes and leadership expert. “Fraud examiners aren’t likely to intentionally deviate from objectivity, but the brain works in ways that we don’t consciously recognize, which inadvertently leads fraud examiners to make mistakes they otherwise would avoid.”

During her session at the 33rd Annual ACFE Global Fraud Conference, Dima Ghawi, who speaks on diversity in the C-suite, told attendees the three most common forms of implicit bias are:

• Affinity bias — the tendency to gravitate to those with whom we share similarities.
• Confirmation bias — the tendency to cherry-pick information that fits previously held beliefs.
• Guilt by association — the tendency to judge someone based on the group they belong to such as religion, race or culture. (See “You Can’t Make a Smoothie Using Only Bananas: A Conversation about Diversity, Equity and Inclusion,” by Kate Pospisil, CFE, FraudConferenceNews.com, June 21, 2022.)

Each of these biases can harm an investigation. “Affinity bias can cause fraud examiners to give someone they like the benefit of the doubt whereas someone they don’t like won’t get the same privilege,” says Hood.

A fraud examiner with confirmation bias might start out believing that a suspect is too old, pretty or rich, etc. to perpetrate a fraud and might overlook key evidence. Guilt by association could stop an investigation from progressing should a fraud examiner rely on their predetermined judgment of a suspect rather than gathering all the information they can and go where the facts lead them.

Implicit biases in anti-fraud investigations

At every stage of an investigation, fraud examiners should consider their biases to ensure that they’re following the facts of the case and presenting those facts accurately in their written reports.

Take rapport building during an interview, which, as fraud examiners know, is vital for information gathering. Preconceived biases may make it more difficult to create a connection with the interviewee, who might have less in common with you because they belong to a different culture, race or religion. This type of guilt by association in turn may result in a shorter interview, missed opportunities to collect information, and even a premature assessment of the subject’s guilt or innocence.

Alternatively, if you feel you have more in common with the interviewee, affinity bias and all its associated problems may result. For instance, you may have a lengthier interview but miss signs of deception.

Either way, those types of biases might lead you to ignore contradictory evidence, misjudge the credibility of certain witnesses, reach a premature hypothesis and interpret information in a way that fits a preconceived theory. When this occurs, you might decide that you know what’s happened and conclude the investigation early, thinking you don’t require any additional information.

A fraud examiner with confirmation bias might start out believing that a suspect is too old, pretty or rich, etc. to perpetrate a fraud and might overlook key evidence.

Ultimately, the effects of implicit biases can have serious consequences for the accuracy and fairness of fraud investigations. It’s essential for fraud examiners to recognize and do what they can to mitigate biases and ensure a thorough and objective investigation.

Overcoming implicit bias

As much as your conscious mind might reject certain biases, your subconscious mind is there to recall them. Overcoming implicit bias requires a concerted effort. Luckily, there are strategies that fraud examiners can employ to keep their biases in check. (See “Our Unconscious and Conscious Minds Do Battle Daily,” by Jim Taylor, Ph.D., Psychology Today, Feb. 18, 2022.)

It’s best to confront biases long before an investigation begins. Educating yourself on implicit biases or providing implicit bias training for your team can give you a head start. Keep biases at bay by assembling a diverse team of investigators from different backgrounds and experiences. A diverse group of individuals reviewing all available evidence and information is more likely to call into question any premature judgments or assumptions about suspects or witnesses to ensure that investigations are conducted fairly and objectively. Another tactic fraud examiners can employ to avoid bias is a standardized investigation protocol, which explains the process and expectations that will be used during the inquiry.

It’s best to confront biases long before an investigation begins.

The American Academy of Family Physicians suggests using the following eight tactics with the acronym IMPLICIT to recognize and overcome biases. (See “Eight tactics to identify and reduce your implicit biases,” FPM Journal, Aug. 16, 2019.)

• Introspection: Explore and identify your prejudices by taking the Implicit Association Test (IAT) or other self-analysis tools such as FranklinCovey’s Bias Self-Assessment. A note of caution though for the IAT: Fraud examiners shouldn’t consider it the final word on their biases; studies suggest the results of the IAT can be unreliable. Use it as a tool of self-reflection with other assessment tools for a comprehensive view. It’s also important for fraud examiners who provide expert testimony to know the results of their IAT could be used as discoverable material in a trial. (See “How to Think About ‘Implicit Bias’;” “Implicit Association Test,” Project Implicit; and “Bias Self-Assessment,” FranklinCovey.)
• Mindfulness: Practice ways to reduce stress and increase mindfulness, such as focused breathing.
• Perspective-taking: Consider experiences from another point of view. Read or watch content about those experiences or directly interact with people from other groups.
• Learn to slow down: Before interacting with people, pause and reflect to reduce reflexive actions. Consider positive examples of people from stereotyped groups, such as public figures or personal friends.
• Individuation: Evaluate people based on their personal characteristics rather than those affiliated with their group. Connect with people over shared interests.
• Check your messaging: Avoid statements such as “We don’t see color.” Use statements that welcome and embrace differences such as “We believe that everyone deserves to be treated with dignity and respect, regardless of their differences.”
• Institutionalize fairness: Support a culture of diversity and inclusion in your organization by laying out principles and processes that lead to more equitable policies and programs.
• Take two: Resisting implicit bias is lifelong work. You must always look for new ways to improve.

What are your biases?

Recognizing your biases involves acknowledging that you have preconceived notions, assumptions or attitudes that influence how you approach different situations. Some common signs of bias include making snap judgments or assumptions about individuals or groups, overlooking or dismissing evidence that contradicts beliefs, and relying on stereotypes or generalizations rather than objective evidence. To recognize your biases, evaluate your own thought processes, question those assumptions and consider different perspectives. This helps make you more aware of your biases so that you can begin to take steps to mitigate their impact on your decisions.

Implicit biases are a part of life and recognizing that we have them and working to overcome them can make us better anti-fraud professionals. Ask yourself, “Why do I think this way?” Search within yourself and move forward knowing your biases so that you can overcome them throughout your work and daily life. Recognize that just because you have something in common with an interviewee, it doesn’t make them innocent; the color of a suspect’s skin or their gender presentation has no bearing on their guilt; and ensure that you aren’t developing hypotheses too early, thus affecting the outcome of your investigation. It’s not always easy to acknowledge or recognize biases, but knowing they exist is the first step to overcoming them.

Kate Pospisil, CFE, is a content manager and formerly led the ACFE’s Diversity, Equity and Inclusion initiative. Contact her at kpospisil@modernize.com.