Fraud attempts on businesses of all sizes are on the rise. According to the latest Association of Certified Fraud Examiners (ACFE®) Occupational Fraud Report, organizations lose 5% of revenue to fraud each year with an average loss per case of $1.7MM. However, you can take action now to remain vigilant and protect your company. Consider Robert’s story and see just how quickly fraud can happen to the most well-intentioned business owner.
Robert received an email from his long-standing client, Sharon, stating that she needed to change her payment details and her new banking details were in the included link. He thought it was strange that she was changing banks even though she wasn’t moving, but he trusted Sharon, so he clicked the link. When Robert clicked the link, he opened the door to fraudsters who locked his accounts and held his data for ransom. Thankfully, Robert had backups in place, but it took 3 days to get his files back in order and cost him several thousand dollars in fees from his IT vendor.
To avoid falling to a scheme like Robert did, the first step is to create a plan. Benjamin Franklin said, “If you fail to plan, you are planning to fail.” Don’t wait until a scam happens to invest in stronger software or to implement a new protocol. Three areas to focus on to fortify your defense against fraud include:
Above all, foster a work environment where employees feel comfortable reporting any suspicion of fraud. This includes clear communication on the company's fraud reporting procedures and a guarantee of confidentiality and protection from retaliation.
Fraudsters are constantly adapting their strategies and finding new ways to scam businesses. For example, check fraud is an old scheme, but it is back again with a fresh twist. Thieves steal physical checks and other personally identifiable information to open fraudulent accounts. Payments appear to be cashed on the payer’s side, but the money never makes it to the payee’s account. If you frequently deal with checks, it may be beneficial to sign up for positive pay. Positive pay is an automated system that helps ensure checks are deposited in the intended account by verifying the dollar amount, check number, and account number. Your financial provider’s treasury management team can help you set up positive pay and other anti-fraud tools to protect your finances.
Check fraud is one of many new schemes developing on a regular basis. Fraudsters have taken advantage of rapidly developing AI tools to create realistic visual and audio personas. You may receive a phone call from a client and think you hear their voice, but instead you are talking to a scammer using a method called vishing or voice phishing. Your relationship with your clients will clue you in to requests that seem out of character. It never hurts to contact your clients with the number that you have on file for them and verify any action with their account.
To help you protect yourself from fraud, we have compiled a checklist to help your business be more efficient in identifying potentially fraudulent activity. Share this list with employees to spread awareness. By incorporating these insights and fostering a culture of vigilance within your business, you can significantly enhance your organization's resilience against evolving fraud tactics.
Fraud typically happens when least expected. Fraudsters are masters of breeching weak points in your systems. However, once you have your plan in place, always follow the protocols. Don't divert from the protocol. All it takes is one moment where you or an employee deviate from the protocol, leaving your business more susceptible to fraud.
Building a culture of vigilance within your organization is key. This includes staying informed about the latest fraud tactics and prevention tools by subscribing to industry-specific tech blogs and publications. By prioritizing ongoing education, you empower your team to become a proactive force against fraud, safeguarding your assets and fostering a more secure environment.
Robert’s story isn’t unique and such fraud attempts happen every day. However, the presence and enforcement of anti-fraud controls is associated with lower fraud losses and quicker detection. Investing time and money in fraud prevention equals more resources to invest in business growth. Robust protection solutions and rigorous protocols protects not only your data, but also your ability to scale and innovate.