Business Owners Tips: Protecting Your Business from Fraud and Scams

^{By Taz Rajan, Bromwich+Smith Staff | 616 words | Reading Time: 3 minutes | Last update: 2023/09/29}

Businesses are being targeted for fraud and falling victim to sophisticated scams. We shared the top 5 scams that target businesses and now, let’s take a look at how you can protect your business.  Action cures fear and is the best defense.  Use these tips to leap into action protecting your business and future.  The potential consequences of falling victim to fraudulent activities can be devastating, affecting your finances, reputation, and customer trust. From common types of scams to actionable prevention measures, we've got you covered. 

Common Types of Business Fraud: 

Fraud comes in various forms, each with the potential to wreak havoc on your business. Financial fraud, identity theft, payment fraud, and insider threats are among the most prevalent. Consider an employee with access to financial systems who chooses to manipulate records to embezzle funds. Think of the worst case scenarios and plan for them at all levels. How will you contact clients or stakeholders during each scenario. Do they vary depending on the situation?  

Recognizing and Identifying Scams:  

Recognizing the signs of a potential scam is the first line of defense. Being able to identify unusual requests, unexpected communication, or inconsistencies in information can save your business from falling into a trap. The first steps start with training your staff. Explain to your staff how scams happen . Encourage employees to talk with their coworkers if they spot a scam. Train employees not to send passwords or sensitive information by email, even if the email seems to come from a manager. Then stick with the program — don’t ever ask for sensitive data from employees by email.  

Preventing Business Fraud:  

• Prevention is far better than dealing with the aftermath of a fraud incident. By creating awareness and accountability, you can significantly reduce the vulnerability of your business to fraudulent activities. This can include simple checklists for invoices. Check all invoices closely. Never pay unless you know the bill is for items that were ordered and delivered. Ensure procedures are clear for approving invoices or expenditures. To reduce the risk of a costly mistake, limit the number of people who are authorized to place orders and pay invoices.  

Remember that legitimate email addresses and websites are easy for scammers to fake. Stop and think about whether it could be a scam before you click. Scammers can even hack into the social media accounts of people you trust and send you messages that appear to be from them. Don’t open attachments or download files from unexpected emails; they may have viruses that can harm your computer.  

Secure your organization’s files, passwords, and financial information. For more information about protecting your small business or non-profit organization’s computer system.   

 Ensuring Secure Financial Transactions:  

Financial transactions are a crucial aspect of any business. By choosing reputable payment processors and staying informed about the latest security measures, you can protect your company's financial integrity. 

 Defending Against Business Email Compromise: Business Email Compromise (BEC) scams are a rapidly growing threat, targeting businesses through sophisticated email manipulation. By setting up multi-step verification processes for fund transfers, you can halt even the most convincing scams. 

Vendor and Supplier Fraud Protection: Your business partners play a significant role in your operations. Knowing who you are doing business with is essential to prevent vendor and supplier fraud. Build a network of trustworthy partners and minimize the risk of fraudulent activities infiltrating your supply chain.  

Protecting your business from fraud and scams is an ongoing endeavor that requires constant vigilance and adaptation. By supplying yourself with knowledge, understanding the tactics employed by scammers, and implementing prevention measures, you can create a secure environment for your business to thrive. Remember, safeguarding your business is not just a responsibility – it's an investment in your business. 

If you wish to complain about what you suspect is a scam, or want further information, you can contact Action Fraud. 

 

Related Blog:

Business Frauds and Scams – Beware and Protect (bromwichandsmith.com)

Author:

By Taz Rajan Community Engagement Partner at Bromwich+Smith 

Taz has been in the finance industry for nearly two decades and has always been passionate about education and empowerment.  Having declared bankruptcy herself, she intimately understands the shame, stigma surrounding matters of debt as well as the joy and relief that comes from restructuring. Taz actively works to normalize the conversation of debt through blogs, media interviews, webinars, lunch & learns and through building relationships.