When it comes to fraud and your business, knowledge is power. The more you understand about the types of fraud affecting small business and how to prevent them, the more likely it is that you will avoid catastrophic loss and long-term injury to your business. There are several simple tactics that will put you in a better position to recognize and stop fraud before it happens. 

Train Your Employees

Your first line of defense is an educated workforce. Train employees to spot fraud and to speak up when it’s discovered. The Federal Trade Commission (FTC) offers a great resource for educating your employees on the different types of fraud they can watch for in the workplace. There, you can learn more about specific scams related to your business. It’s important to create policies and procedures that enforce safety and security, such as never requesting sensitive information via email, and then follow them. Encourage employees to speak up when they are alerted to any type of fraud or scam.

It’s important to mention that when expanding your workforce, you know who you’re hiring. Don’t rely entirely on references and work history. A thorough background check can give you the security and peace of mind you need to confidently hire trustworthy people. There are several companies that provide this service quickly and efficiently.

Be Vigilant

It’s when we get comfortable in routine that scammers gain an advantage. It’s imperative to review all invoices and payments to ensure you know what’s being ordered is being paid for. Pay attention to details when anyone is requesting payment from your business and have precautions in place to ensure major payments trigger some type of warning or approval.

Know who you’re doing business with. Ensure that when you work with a new company, you research their history and reputation – see what others say about that company. 

Be Tech-Conscious

Scammers can use fake caller ID information, fake emails, websites, and social media to fool you – and they’re experts at it. Pause to think before you click on any links, open any attachments, or download files to your computer systems. See more about computer security basics at FTC.gov.

Keep your software up to date and back up files on a regular basis. You should always password-protect your devices and never leave them unattended or connected to unsecured Wi-Fi where you could be left vulnerable.

Know the Enemy 

It’s critical that you keep up on the latest scams that target small business and know what to look for. 

Phishing Emails: Phishing emails appear to be from a legitimate sender but are designed to capture sensitive bank information and passwords when you click through to a fake website. To avoid being Phished, keep firewalls and anti-virus software up to date and never click on links sent from unknown senders. If you’re unsure if the sender is legitimate, pick up the phone and call to verify. Read more about Phishing scams on our website.

Account Takeover: One of the most common and most dangerous scams for small businesses is a bank account takeover. Either by fake email or website, a fraudster will deliver malicious software to your system that may be able to obtain IDs and passwords which then allow for withdrawals from your bank account. In addition to using caution when online or checking emails, bank accounts should be monitored daily for suspicious activity, and you should have a conversation with your bank about the fraud-alert safeguards they have in place for clients.

False Invoices: Your company probably receives many bills each month which makes this scam so appealing. Scammers may try to invoice companies for advertising that never ran, memberships that don’t exist, or supplies never ordered or received. Invoices should be reviewed by employees familiar with your business accounting procedures. It may be beneficial to use some accounting software to help flag suspicious invoices. 

This short list certainly isn’t exhaustive and unfortunately the playing field for scammers is constantly changing. The best way to avoid being scammed is to educate yourself and your employees and always be on the lookout for the next scam. The FTC is a great resource to keep you one step ahead of fraudsters. You can also search for blogs and other secure websites like the Better Business Bureau for the latest news and updates.