Monetary Incentives Work Without Negative Side Effects
The Chamber of Commerce has commenced a well-financed and aggressive lobbying campaign to undermine America’s most effective whistleblower law, the False Claims Act. To justify its anti-whistleblower campaign the Chamber published a report entitled, “Fixing the False Claims Act: the Case For Compliance-Focused Reforms.” The purpose of this blog series is to combat the Chamber’s misinformation, and explain why the False Claims Act must be protected. Whistleblowers and their supporters are strongly urged to read this blog series and share it with friends.
Fact Number 2:
The University of Chicago Booth School of Economics conducted the most comprehensive and objective study of whether the False Claims Act works. Their study was designed to “identify the most effective mechanisms for detecting corporate fraud” and was based on an “in- depth” study of “all reported fraud cases in large U.S. companies between 1996 and 2004.” The Booth School’s conclusion is clear: Qui tam laws are key to effective fraud detection. Some of the key findings are:
“A strong monetary incentive to blow the whistle does motivate people with information to come forward.” “Having . . . monetary rewards has a significant impact on the probability a stakeholder becomes a whistleblower.” “[T]here is no evidence that having stronger monetary incentives to blow the whistle leads to more frivolous suits.” “Monetary incentives seem to work well, without the negative side effects often attributed to them.”
The Chamber completely ignored the University of Chicago Booth School’s study. In addition, an Action Alert has been issued by the National Whistleblower Center so members of the public inform their representatives that the False Claims Act should not be “reformed” as proposed by the Chamber.
