You always hear about stories of consumers becoming victims of fraud. However, small businesses, are often targeted by individuals or groups with malicious intent. While bigger corporations have measures in place to protect themselves from attacks, small businesses do not have the resources. Many small businesses are vulnerable to fraud and, if they end up falling for a scheme, they can lose hundreds of thousands of dollars which can lead to bankruptcy.
There are many different types of fraud committed against businesses, varying from fraudulent activities carried out by employees to online scams. Here are a few of the more common schemes and how to prevent them from devastating your business:
A growing concern for small businesses is fraud perpetrated electronically. Hackers are trying to steal data and other sensitive information through phishing (an attempt to steal usernames, passwords, and credit card numbers), slamming (changing your telephone service without you knowing), and identity theft.
One way to protect your small business is by exporting your data to the Cloud. A platform like ServiceNow can ensure that your data is safe from security breaches and other third-party attacks. You can contact a ServiceNow implementation partner to help you eliminate vulnerabilities immediately before any hackers take advantage of them.
To prevent your employees from falling victim to fraud and endangering your small business, teach them how to spot common online scams. Tell them about obvious red flags like spelling and grammar. For a more drastic approach, you may bar your employees from accessing non-work related websites and e-mails during office hours (or using office equipment). Make it clear that you have these measures in place to protect critical data from being stolen.
Another common type of fraud involves employees. Many small businesses are often a lot less formal and more relaxed with their rules and processes. This may make way for crimes.
Cash can disappear from a small business without an owner knowing through skimming (an employee takes profit that has not been reported/recorded), larceny (an employee takes profit that has been reported/recorded), and disbursement (an employee takes funds that have been released without authorization by the owner).
A simple way to prevent this type of fraud is to create a way for other employees to anonymously report bad practices. You can have a tip box where your employes can send you information without fear. However, make sure to investigate all claims fairly and thoroughly so that it will not be abused nor used to settle personal grudges.
You also should conduct internal and surprise audits regularly. Having unannounced audits will deter people from committing crimes knowing that they can be caught anytime. Moreover, before you add anyone to your team, you need to conduct a thorough background check.
The customer is not always right. Customers can also perpetrate fraud to small businesses. Anything from using stolen credit card information to asking for a refund for a product that has not been purchased from your store is considered fraud.
The best way to protect your small business is to create a clear and stringent return process. Most retail stores have one in place to avoid false return schemes.
Your small business is being targeted by people with ill intent, but you can protect yourself from falling victim and losing money by being aware of common schemes and adopting measures that will prevent any type of fraud before it happens.