Small businesses with fewer than 100 employees lose an average of $154,000 to fraud, according to the Association of Certified Fraud Examiners. With the prospect of fraud wreaking havoc on small businesses, it’s important to devise a strategy for preventing and detecting fraudulent behavior. Even outside of your small business you run the risk of falling victim to fraud in your personal life. Phishing emails and texts hit us daily and some of them are quite convincing or catch us with our guard down! Below are some good reminders for you in both business and life!

Examine your bank statements

You could overlook transactions leaving your bank to an unidentified place if you don’t examine your bank or credit card records for abnormal activity on a frequent basis. Any unusual behavior will be detected if you keep a close eye on your accounting entries. If you see any strange transactions, please notify your bank immediately. I’ve had this happen several times with my credit cards receiving fraudulent charges. Thankfully I jumped right on it and my credit card company fixed it. Also one time I noticed a $0.25 error that the bank made, depositing $0.25 less than I had put in. I marched down to the bank and after a 30 minute meeting and a several days, I got it back! Being diligent with your records is important!

Documents with Confidential Information

Keeping all of your business records locked up in a safe place is an important step you can take to minimize the chances of fraud. This includes financial records, credit card details, and federal tax ID numbers, or even client information. This is a huge problem, especially if you’re in the medical industry, because not only would you be responsible for potential fraud, but you’ll also have to prepare for medical malpractice attorneys thanks to the displacement of personal information.

If a fraudster gets their hands on these documents, they could hijack your company’s identity and open new accounts in your name without your knowledge. They could also sell your information to other offenders. With this in mind, be cautious about how you dispose of sensitive business data, and destroy all correspondence and account information. When people search through your trash, it will be tough for them to identify your business details. It’s definitely a bit OCD but I personally tear up by hand (I don’t have or feel I need a shredder) documents with sensitive information on it, and deposit them into different trash cans around the house which means they’ll likely be taken out at different times. I also limit what I have in sites like DropBox or Google Drive and always maintain strong passwords.

Transactions that are more secure

With 74 percent of companies in the United States becoming victims of attempted or real fraud, being diligent about the transaction methods you use could help you avoid becoming a victim of fraud. Some payment routes  do not need the sharing of any bank information between the customer and the business. Positive pay (the mechanism used by banks) is also used by this company to avoid fraudulent activities. Using a secure, trusted payment method can help you avoid fraudulent transactions and limit access to your company account information, preventing identity theft.

Basically whenever you’re moving large amounts of money (i.e. wiring when you send a deposit to close on a house), read, re-read, check and double check you’re sending it to the right place, and ask for a confirmation of receipt to ensure peace of mind.

Educate your employees on how to spot and report fraudulent activity

Staff training on suspicious activity that could be related to fraud, how to prevent fraud, and how to warn you of anything unusual will equip your team to alert you if they see or hear suspicious behaviour. 

For example, teaching employees to keep confidential information locked away, shred and dispose of sensitive papers properly, limit sharing company information with customers over the internet and phone, and ask customers for identification if they are making a larger-than-usual transaction could help prevent a fraudulent crime against your company.

The four measures listed above are just a few of the ways you could help to reduce the risk of fraud in your company. Be alert and suspicious of any unexpected activity, as fraud can come from anybody and anywhere around the world, not only unrelated third parties. It could be unwitting employees, suppliers, or even consumers that are the cause of your company’s demise.

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