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Fraud Education

Business Financial Fraud Prevention

Nearly all companies are at risk of fraud, but American small businesses are especially vulnerable. The sheer volume of risk areas when combined with sometimes lower profit margins can make fraudulent losses more than an inconvenience. They can be put out of business.

How can you spot business financial fraud?

Scammers hit businesses from many angles. In addition to internal employee theft and fraud, outside fraudsters attempt to breach a businesses’ financial accounts and even those of their customers. Here are some common red flags and scams that affect businesses:

  • Faking emails and websites with quality that makes them look real
  • Using Caller ID spoofing to pretend to be from a trusted financial institution or vendor
  • Deploying email or text phishing to gain access to internal accounts through employee credentials
  • Using malware to hijack an account or website until a fee is paid
  • Demanding payment for phony invoices or undelivered products or services
  • Washing paper checks of correct payees and amounts to alter them for cashing or for sale online

4x In small businesses, check and payment tampering occur at four times the rate of larger organizations. — BAI.org

What steps help prevent business financial fraud?

Thankfully, business owners have a range of tools that can help prevent fraud before it happens or to at least mitigate the damage once it’s happened. Keep these tips in mind to help keep your business finances secure:

  • Use positive pay fraud prevention services or electronic methods of payment such as online banking or third-party apps.
  • Don’t mail checks and, if you have to, drop that mail inside a postal facility or send it via registered or certified mail.
  • Protect your network with firewalls, anti-malware and email phishing detection products.
  • Utilize multifactor authentication for access business bank accounts.
  • Monitor accounts and credit card statements closely for suspicious transactions and set notification alerts.
  • Use hard-to-fake checks that have security features such as holograms, heat-sensitive ink, chemical reactive paper and a true watermark.
  • Train employees on security, popular scams and fraud prevention.

The Federal Trade Commission offers many tips for protecting your organization from scams. Visit Protecting Small Businesses to learn more. If you’ve been a victim of business fraud, report it.

Sources: ftc.gov, uschamber.com