As long as people trade with one
another, whether as individuals or through companies, some will try to extort
others through business fraud. Running a business immediately puts you at risk,
but that does not mean you have to fall victim to a scam. Familiarizing
yourself and your employees with the signs of possible scams and known
defensive measures will greatly lower your risk of fraud and guarantee happy
customers.
- Types of Business Fraud
When you run a company you meet many
people that opens up your professional and personal circles of friends. Since
you trust a friend to have your best interests at heart, if they suggest a
person in their life for a job with your company you will want to help. Sometimes
that means hiring a new employee without fully reviewing their background or
credentials. This “friendship” scam hurts your company if the new hire cannot
perform the necessary tasks for the job due to lack of skills or experience, if
they do not take the position seriously and slack off at work, or, in the worst
case, they use the opportunity to rob the business or other employees.
These signs of business fraud do not only apply to workers hired at the request of a friend. You hope your sense of
trustworthiness engages during the interview process and new person you hired
will fit well and behave responsibly, but sometimes it can fail you. Other
times a good employee finds themselves unmotivated or in financial trouble, so
they go to extreme measures without informing you or their manager. This can
lead to the theft of company time and money through the browsing of social
media websites and the internet on company computers, or employees using sick
days while they work at another job.
Business fraud does not always come
from within, however, and many times con artists approach a company with the
intention of defrauding them through the impersonation of an actual client.
Usually, this happens over the internet or in another manner where the client
is not seen personally, but must provide private information to validate their
identity. The criminal steals names, insurance numbers, credit card or bank
information, and passwords to overtake service accounts or make purchases in
the assumed name. All these examples of business fraud damage your company by
decreasing productivity and morale, causing consumers to question the
credibility of your business, and put you at risk of losing company funds
unnecessarily.
- Preventative Measures to Stop Business Fraud
Now that you feel familiar with
several types of business fraud, here is a list of ways to prevent them and
others from affecting you and your company:
• Thoroughly investigate the
background of a possible hire
• Only employ workers based on merit
and not as a favor to a friend or family member, unless you are personally
familiar with the person’s qualifications
• Regularly check for copycat products
being sold or your logo being used on illegitimate products
• Never purchase stocks or shares from
cold calls into your company
• Install captcha and other security
methods to guarantee the validity of customer information
• Draft clear policies regarding fraud
prevention and educate your staff
• Randomly inventory your office
supplies and products
• Conduct third party audits of
financial records
• Check employee recorded time tables
against payroll records
• Introduce whistleblower protection
policies to encourage the reporting of fraud
• Establish strict confidentiality and
honesty policies to protect confidential information
