Entries tagged with “fraud”.


When fraud is improperly managed, it’s not only money and assets that are lost. Companies also lose intellectual property and people when trust in the company culture is lost. To be able to survive and thrive, fraud prevention is essential for all small businesses.

Preventing fraud in the workplace is not as simple as separating the accounts receivable and the accounts payable position. Management and administrators must also know who is most likely to commit fraud, and how the fraud can be detected.

Who is likely to commit fraud?

According to the Association of Certified Fraud Examiners (ACFE), males are twice as likely as females to commit fraud. Also, their average “take” is twice as high. Single perpetrators are twice as prevalent as groups when it comes to defrauding – 64 percent of all frauds are committed by one person. The losses from these individuals are staggering, nearly five times the amount of multiple perpetrators.

The largest losses are likely to come from the top, rather than the bottom of the organizational chart with owners and executives stealing far more than low-level employees. Long-term employees are much more likely to steal than the new people.

Much of this has to do with trust. Employers are more likely to place their trust in those individuals with a long tenure and a large amount of responsibility. For this reason, measures should be in place so that stealing is more difficult – these measures are called internal controls.

What are people most likely to steal?

The four types of assets most commonly stolen are: cash, inventory, information and securities. Although cash is the most common type of theft at 88 percent, securities fraud has an average loss of $1.85 million.

When it comes to fraud, “cash” is rarely in the form of greenbacks. Fraudulent disbursements are where almost 72 percent of theft occurs. Practices like “skimming” are when an employee accepts payment from a customer but does not record a sale. There is also “cash larceny” which is where an employee steals cash and checks from daily receipts before they can be deposited.

How to prevent small business fraud?

  1. A good set of internal controls is vital. Examples: Reconciling bank statements each month, splitting the financial processes over several people, and protecting cash and checks against unauthorized use.
  2. Implementing an anonymous tip line where fraud can be safely reported without fear of repercussion. This should coincide with company training about fraud and ethical behavior.
  3. Implementing a mandatory vacation policy. If an employee, particularly one in the financial departments, refuses to take a vacation, it can be because they cannot afford to have anyone look too closely at their activities.
  4. Open communication and perceptive hiring. If an employee begins to live above his or her means, fraud should be considered.

Please contact us for more information on fraud prevention in your business.

Small businesses don’t have many of the luxuries that large corporations enjoy. One errant transaction, for example, will affect a small business much more than it would a corporation. That’s why small businesses have to practice fraud prevention at all times.

A general rule of thumb would be that if anything seems too good to be true, than it probably is. But fraud prevention goes much deeper than this. Sometimes, businesses have to look out for seemingly normal transactions.

There are characteristics of suspicious transactions that all business owners should be aware of. On top of this, they should pass this knowledge on to employees so the entire company will be aware.

A recent Business 2 Community article talks about fraud prevention and describes some telltale signs of suspicious transactions. According to the article, businesses should always look closely at a buyer’s billing address:

“Be wary of unusually large orders placed online without any contact from the customer, or rush orders for large quantities or for expensive goods, warns Janet Attard, author of The Home Office and Small Business Answer Book. Other red flags: orders shipped to a different address than the billing address; orders from foreign countries; and billing addresses that don’t match the information on file with the credit card company.”

If a buyer actually lives at his or her recorded billing address, it would be relatively easy for businesses to respond to any foul play. But if the billing address is a fake, then businesses have no real way of tracking down the buyer.

We wish that we didn’t have to warn business owners about fraud, but that’s the reality we face today. You can’t just take a transaction for what it is. If you want to actually receive money, you have to have a system in place to prevent fraud.

To talk more about fraud prevention, or anything else, please contact us.

Are you taking the necessary steps to protect your business from fraud? According to the Association of Certified Fraud Examiners (ACFE), companies with less than 100 employees lose approximately $155,000 as a result of fraud each year. Small businesses also have a higher fraud rate than larger companies and non-business owners. The following are a few simple tips to help with fraud prevention for small businesses.

Educate Your Staff. Employees are perhaps your biggest point of vulnerability when it comes to fraud, but they are also your first line of defense. Hold regular training sessions on basic security threats (online and off) and prevention measures – both for new hires and seasoned staff. Also, train employees on the proper use and handling of company confidential information, including financial data, personnel and customer information.

Background Checks. Basic pre-employment background checks are a good business practice for any employer, especially for those employees who will be handling cash, high-value merchandise, or have access to sensitive customer or financial data.

Fake Invoices. Fraudulent companies have been known to send out solicitations for advertising and/or products in the form of invoices to trick businesses into paying without realizing that it is not an actual invoice and that they owe the sender nothing.

Mobile Fraud. According to a study conducted by LexisNexis and Javelin Strategy & Research, small businesses that accept mobile payments are exposing themselves to risk by using too-few fraud-prevention systems. Some strategies for preventing mobile fraud include the following:

  • Thoroughly authenticate transactions through mobile devices.
  • Maintain open communications with financial institutions and other mobile merchants to better understand the evolving nature of fraud threats and solutions.
  • Track fraudulent activities by each channel you offer.

Hotlines. A fraud hotline is the simplest, cheapest, and most effective way to detect fraud based on studies of how fraud is detected. Employee tips result in the detection of fraud more than any other method. Phone or web-based hotlines are common tools for fraud reporting and there are several third-party providers that offer these services. When employees have a confidential means of reporting issues, you are more likely to receive helpful tips that can stop fraud in its tracks.

You may want to consider purchasing an insurance policy that protects you against any losses that you may incur from crime or fraud. However, careful attention and verification can prevent businesses from falling victim to fraudulent activities. Keep the above tips in mind to help prevent your business from falling victim to fraud.

For more information on fraud prevention for your small business, please contact us.

As our society’s digital dependence increases, so does the average person’s credit card usage. More businesses are going paperless – leading to an increase in online payments. Also, in general, online purchases are more popular than in-store purchases. In fact, a 2013 survey by Ebates.com, involving 1,000 U.S. consumers, revealed that 84% preferred shopping online than in-store. In light of these trends, it’s even more necessary to be well-versed in safe credit card usage practices.

One easy preventive measure against fraudulent usage of your credit card, should it be physically stolen, is to opt for including a photo of yourself printed on your card. Many banks already offer this option, which makes it practically impossible for a thief to use your stolen card in physical stores. Keep in mind that this provides little protection against fraudulent online purchases.

When using your card online, check your computer for malware before inputting your card number. Often, malware, acquired via unsafe web surfing, install keyloggers which can record and transmit your credit card information as you type it.

Another method used to steal your credit card information is via phishing sites. Make sure to check the URL or address bar in your browser to make sure you aren’t on a phishing site. Phishing sites perfectly mimic the appearance and functionality of a legitimate site, like Amazon, to trick you into submitting your sensitive information.

The key to minimizing the risk of unauthorized use of your credit card is vigilance. If you approach each use of your card with caution, you’ll avoid most credit card stealing traps.Contact us to learn more about fraud prevention tips.

Fraud can have disastrous consequences on a small business. Knowing how to identify your risk factors is a key element when it comes to preventing fraud within your enterprise. Because small businesses are more prone to spending less time and money on fraud prevention due to limited assets, the risk is vastly higher than those of huge corporations.

Due to technologies such as mobile devices that can span numerous operating systems, criminals now have even more ways to infiltrate in-house networks to steal your information.

Even though it may sound daunting, small businesses can administer safeguards and procedures that can maximize fraud detection. Consider the following low-cost strategies that can lessen the possibility of fraud for your small business.

-When hiring new employees, be thorough. Call all former employers and always conduct a background check. This can help you to single out potential candidates that may have a criminal background.
-Make sure to implement a standard code of conduct and share it with all of your employees. Make sure that they are aware of any repercussions for not following appropriate protocols.
-Keep close track of all of your bank statements. Be aware of how much is coming in and going out at all times. Being detail-oriented and watching out for inconsistencies is crucial when it comes to taking control of your finances.
-Use firewalls and anti-malware software. Protect your network by using unique passwords that have random upper and lower case letters and numbers.

Sadly, no business is free of the threat of fraudulent behavior. Being diligent when it comes to identifying your risk factors can greatly diminish the chance of being a victim. If you would like more information on fraud prevention, please contact us.