Fraud in sales networks: when ‘that’s how it’s always been done’ becomes a risk
Fraud in sales networks: when ‘that’s how it’s always been done’ becomes a risk
Sales departments, insurance and finance: the irregularities that can become the norm, and the responsibilities of those who are supposed to monitor them.
A customer calls and asks for a copy of the contract. The sale was recorded months earlier; perhaps the commission has already been paid. Yet the signature seems suspicious, or the order confirmation is missing. Situations such as these highlight why fraud within sales networks deserves greater attention. Behind an irregular transaction there may lie commercial pressures, tolerated practices and controls that have failed. This happens in the sale of goods, but also in insurance, finance and services.
The sales sector: everyone focuses on the results, but who checks how they are achieved?
In many companies, the sales department is the driving force behind the business. Production, procurement, administrative work and, of course, turnover all depend on sales. Yet, when it comes to fraud prevention, attention tends to focus on other business functions: administration, finance, procurement and supplier management.
Sales are continuously measured, analysed and compared with expected results. Volumes, deviations from the budget and commissions are monitored. What is far less obvious is the extent to which the accuracy of the process that led to those figures is verified.
Furthermore, sales staff often find themselves at the end of a long chain. Targets are set by senior management, passed down through area managers, coordinators and team leaders, before reaching the person who is actually responsible for finalising the contract with the customer.
With each step, the pressure may increase. The consequences of failing to meet a target, however, are not necessarily felt equally by everyone.
It is precisely in this context that certain behaviours may arise which, at least initially, are not perceived as particularly serious.
An early order, a missing signature, a sales target to meet
One sales representative places an order before receiving final confirmation from the customer. Another personally advances a payment in order to meet the monthly target. Within a sales network, some orders are allocated to a colleague who has yet to reach the threshold required to qualify for the bonus.
Then there are far more serious situations, such as a signature being affixed without authorisation or a contract being registered without the customer having given their consent.
Of course, a distinction must be made. Not all such behaviour constitutes fraud. A payment made by a third party may have a legitimate explanation, just as the transfer of an order between agents may be provided for by the commercial organisation.
The problem arises when certain transactions are used to present results that differ from the actual ones, or when procedures designed to ensure the integrity of the sale are circumvented.
And especially when nobody feels the need to ask for an explanation.
‘That’s how it’s always been done’
It is a sentence that deserves attention.
Anyone joining a sales network learns much of the job from those already there. They do not just receive guidance on products or sales techniques. They also learn how to deal with urgent matters, which procedures can be shortened, and what behaviour is tolerated by managers.
It may happen that a more experienced colleague suggests uploading an incomplete file anyway, reassuring the newcomer that the documents will be sorted out later.
If no one steps in, that shortcut ends up being regarded as normal. It may well be repeated for months on end, with no apparent complaints and satisfactory commercial results.
However, the fact that a procedure has never caused any apparent problems does not mean that it is correct.
In the field of fraud prevention, this mechanism is based on the concept of slippery slope, the gradual normalisation of minor breaches. When a certain behaviour is repeatedly accepted, it can become easier to justify subsequent instances of it as well.
It is not an inevitable outcome, and it does not mean that every irregularity will lead to fraud. It is, however, a real risk for organisations that get into the habit of judging transactions solely on the basis of the outcome.
Can pressure to meet targets encourage fraud?
Commercial pressure alone is not enough to explain fraudulent behaviour. Many professionals work towards challenging targets without ever breaking the rules.
The risk increases when, in addition to the required outcome, there is the possibility of altering a document, a record or a transaction without encountering adequate controls.
This dynamic can be understood through the fraud triangle: pressure, opportunity and rationalisation.
This last point is particularly relevant in commercial networks. A person may end up justifying improper conduct by convincing themselves that it is merely a temporary measure, that no one will suffer any harm, or that the matter will be rectified as soon as possible.
The issue of pressure on targets has already been addressed in a previous SENAPA article, The Dark Connection between Target Pressure and Corporate Fraud.
What we are particularly interested in exploring here is the way in which certain pressures manifest themselves in day-to-day behaviour, which is often evident in documents and management systems long before any irregularity is detected.
Wells Fargo: when achieving a target becomes more important than the customer
One of the most telling examples is that of Wells Fargo.
In September 2016, the Consumer Financial Protection Bureau (CFPB) announced a fine of $100 million against the US bank for opening accounts and activating financial products without customers’ authorisation.
According to the analysis carried out at the time by the bank itself and reported by the authority, more than two million deposit accounts and credit cards may not have been authorised.
The link to commercial objectives was explicit. Employees were incentivised to increase the number of products sold and, in several cases, had opened new accounts or transferred funds from existing accounts without the customers’ knowledge.
The transaction boosted sales figures. The customer, however, had not asked for that product.
In Official press release from the CFPB dated 8 September 2016 The system of targets and incentives is identified as one of the factors that had encouraged such behaviour.
Wells Fargo provides an important insight: monitoring the number of products sold was not enough to ensure the accuracy of transactions.
If a bank registers a new account, that account appears in the results. To determine whether it actually represents a legitimate sale, it is necessary to check how it was opened and what authorisation was obtained.
A distinction that seems straightforward, but which can prove decisive when financial incentives depend precisely on those figures.
Enron: when the results themselves are fabricated
The Enron case concerns a different context – that of the presentation of financial results – but it illustrates organisational dynamics that are worth considering.
In the documents published by the Securities and Exchange Commission (SEC), the authority described how some executives had set financial targets based on analysts’ expectations, rather than on the performance the company could realistically achieve.
When the actual results were not sufficient, accounting tricks were used to achieve the desired figures.
One incident relates to the second quarter of 2000. According to the SEC’s account, the executives wanted to report earnings per share of 34 cents, which was higher than the 32 cents expected by analysts. Accounting reserves were misused to support that result.
Enron is not an example of fraud in the collection of orders or the signing of contracts. The issue in this case concerned the financial data presented to the market.
However, there is one element in common with the distortions that can occur in commercial networks: The expected outcome ultimately influences the way in which reality is portrayed.
When this happens, there is a risk that the control system will become involved in achieving the objective, rather than carrying out its monitoring function.
Internal pressure in the ACFE 2026 data
Another useful resource comes from the Association of Certified Fraud Examiners.
The report Occupational Fraud 2026: A Report to the Nations It examines 2,402 cases of employment fraud investigated in 143 countries and territories.
Among the behavioural indicators associated with the highest median losses is the excessive pressure from within the organisation. In the cases analysed where this signal was present, the median loss amounted to $532,000.
This figure requires some clarification. The study concerns cases of workplace fraud that have already been investigated, not a representative sample of all workers or all retail networks. It does not, therefore, prove that a person under pressure will commit fraud.
It does, however, indicate that the organisational context must be taken into account in risk assessments, alongside individual behaviour and the practical possibilities for circumventing procedures.
The same report notes that the presence of anti-fraud controls is associated with lower losses and shorter detection times.
This is a factor that should be of particular interest to companies where business performance is monitored on a daily basis, whilst checks on the quality of operations are carried out only on a random basis or following a complaint.
Insurance, finance and services: the risk does not end with the sale of goods
The situations described do not apply exclusively to those who sell physical products.
In the insurance sector, a case may relate to a policy that the customer claims not to have taken out, a disputed application, or contractual information that has not been correctly recorded.
When it comes to the allocation of funding, however, issues may arise relating to the documentation submitted, the accuracy of the information provided to the customer, or the propriety of the activities carried out by staff.
These are areas in which professional and behavioural obligations already exist.
In the insurance distribution sector, for example, the IVASS Regulation No. 40/2018, as subsequently amended, governs various aspects of intermediaries’ activities, including information and training.
For financial services agents and credit brokers, the the regulatory framework referred to by the OAM sets out specific requirements and responsibilities, including those relating to staff.
However, having attended a compulsory course or meeting the professional requirements does not necessarily mean that one is prepared to deal with all the situations that may arise in the field.
A sales assistant may know the product they are selling inside out, yet not be fully aware of the consequences of signing a document without authorisation, placing an order before it has been confirmed, or making a payment on the customer’s behalf.
And if those practices were taught to him by those who trained him, he may never have questioned them.
The problem arises when the customer starts asking questions
Many irregularities remain hidden until someone has reason to check the original documents.
Then a customer asks for a copy of what they have signed. They may wish to exercise a right provided for in the contract, dispute a charge, request a guarantee, or simply claim that they never authorised a particular transaction.
It is often at that point that the company has to piece together the whole story.
Who took charge of the case? Where is the original document? How was consent obtained? Who authorised the payment? Why was the order recorded before it was confirmed?
The irregularity may date back a long time. The complaint is merely what brings it to light.
An Italian case study: unsolicited energy supplies
In February 2024, the Italian Competition and Market Authority imposed a fine of 900,000 euros on Servizio Energetico Italiano.
According to the AGCM’s findings, the company had entered into contracts and commenced the supply of electricity and gas without the consumers’ signature or consent, and had also demanded payments that were not due.
The authority had also noted, in some cases, that contractual documentation had not been sent or had been sent late, and that there had been obstacles to the exercise of the right to a cooling-off period.
The Official press release from the AGCM dated 16 February 2024 documents the alleged conduct.
We cannot automatically attribute these irregularities to pressure to meet sales targets: the measure does not demonstrate that causal link.
The case is nevertheless useful because it concerns a specific problem that is common to many sectors: A contract may be activated in the company’s systems without the data subject’s consent having been properly obtained.
And what responsibilities does the company have in all this?
When a forged signature or an unauthorised contract comes to light, attention understandably focuses on the person who actually handled the case.
But would it be enough to stop there?
If an employee has learnt improper behaviour from their manager, if that procedure had been known for some time, or if orders were accepted without verification because they enabled targets to be met, the analysis should also take the organisational system into account.
The company determines how performance is measured, decides on the methods for paying commissions, sets out the controls and identifies who is responsible for taking action in the event of any irregularities.
From a legal perspective, the company’s liability is not automatic. It must be assessed taking into account the relationship with the seller, the conduct in question and the applicable provisions. In the credit sector, for example, Article 128-novies of the Consolidated Banking Act sets out specific joint and several liabilities for financial agents and credit brokers in respect of damage caused by their employees and associates in the course of their business.
When it comes to prevention, however, the issue is broader.
Who was supposed to check?
And, above all, were the checks actually capable of identifying anomalies, or did they merely verify that the fields in the management system had been filled in?
The difference is substantial. A purely formal check may confirm that a contract exists, without proving that it has been duly signed.
Where can this chain be broken?
A sales network cannot be monitored only when a dispute arises. By that point, commissions may already have been paid, invoices issued, services activated or other contractual obligations fulfilled.
Some checks can be carried out well in advance.
Independent confirmation of orders, for example, can help to verify that the customer has actually accepted the transaction. A comparison of the capture, signature and upload dates can reveal transactions that have been recorded in advance.
Commissions also warrant attention. Orders frequently transferred between agents, transactions cancelled immediately after a bonus has been earned, or payments made by parties other than the client may be indicators that warrant further investigation.
Not all of these factors indicate fraud. However, they can help to identify situations that require clarification and verification of supporting documents.
Another useful factor is the analysis of complaints. If complaints repeatedly centre on a particular sales network, a manager or a specific period, it may be worth examining how the targets were set and achieved.
Finally, there is training.
A great deal of time is often spent teaching people how to sell a product, how to overcome an objection or how to reach a target. It would be useful to devote just as much attention to the consequences of a sale that has been handled incorrectly.
And to give staff the opportunity to report problematic situations without this automatically resulting in commercial penalties.
Pipe formation and standardisation: an in-depth look from SENAPA Academy
The mechanism by which minor infractions eventually become habits is explored in depth during the course That’s What Everyone Does – Slippery Slope, delivered by the Dr Chiara Guizzetti, a professional with experience in internal audit, compliance, anti-fraud and internal control systems.
The course explores the themes of rationalisation, organisational pressures and the gradual acceptance of behaviours which, over time, cease to be perceived as irregular.
The in-depth feature is available in on demand on SENAPA Academy.
Before looking at the result, we should consider how it was achieved
A company may have a well-trained sales team, competitive products and satisfactory sales results. But if it does not check how contracts are secured, it risks only discovering certain issues when a customer decides to dispute them.
At that point, it becomes necessary to establish responsibilities, documents and procedures. And sometimes it transpires that certain behaviours had been known about for some time, but had never been properly investigated.
For this reason, when an irregularity is identified, it should not be enough simply to ask the person who placed the order for an explanation.
We need to understand how that person worked, what instructions they were given, what checks were in place, and why they did not work.
Above all, it should be ascertained whether this was an isolated incident or a standard operating procedure that other staff members regard as entirely normal.
This audit covers the entire organisation, not just the sales department.
Sources and references
CFPB – Wells Fargo (2016). Regulations on unauthorised account openings.
SEC – The Enron case. First Amended Complaint against Jeffrey K. Skilling and Richard A. Causey.
ACFE – Occupational Fraud 2026. A Report to the Nations.
AGCM – Italian Energy Service (2024). Regulations on unsolicited supplies.
IVASS. Regulation No. 40/2018 on insurance distribution, as subsequently amended.
