Many small business owners believe that their business is too small to be targeted by fraudsters and scammers. This could not be further from the truth. Criminals looking to make a quick buck know full well that the less resources a business has at its disposal, the less likely it is to have effective anti-fraud controls, if any at all.
There are a few steps you can take to protect your business from both internal and external dangers.
- Customer Fraud
The customer is always right, apart from when they try to scam you out of your hard earned money. Fraudsters posing as customers will try paying with fake currency, fraudulent cheques or someone else’s credit card information. The more audacious ones might try building up your trust in the hopes of securing a line of credit that they do not mean to pay back. Common sense and vigilance is crucial in stopping customer fraud: be on the lookout for suspicious or irregular orders and behaviour and carefully assess the validity of your customer’s identity before making a sale.
- Employee Fraud
A shocking one in five small businesses fall prey to internal fraud at some point or other. An employee gone rogue could target most any of your assets if they were so inclined. The most important protective measure is to know and monitor your employees and the potential threats they might bring. This should start with a thorough background and reference check. Keep a close eye on your employee’s behaviour: sudden and unexplained wealth, a drastic change in lifestyle as well as unwillingness to accept a promotion or take time off work may be a red flag for fraudulent activity.
- Protect Yourself from Lawsuits
Although not fraud in the traditional sense, lawsuits can be ridiculous and crippling to the point of being fraudulent. Multi-million dollar settlements for customers being burned by hot coffee come to mind. Seasoned scammers and first timers alike will jump on every opportunity to file a bogus insurance claim. Your job is to eliminate your liability for any potential injuries, real and fraudulent alike. Make a detailed assessment of the hazards inside your business, and be sure to post warning signs that are clearly visible, legible and easy to understand. Otherwise, you will be paying some hefty litigation charges.
- Supplier Fraud
If you do not take precautions when deciding which suppliers to do business with, you are putting your finances at risk. Dishonest businesses, or scam artists posing as business, are on the hunt for gullible prey. Research each and every supplier you intend to do business with, and make sure they are who they claim to be. This can be as simple as a google search, or if it is a large business deal you could consider paying a credit reference agency to do a full credit check. Once you have decided on a supplier, be sure to check you are getting what you paid for. Unscrupulous suppliers may overcharge you, or even charge you for goods or services they have not even provided.
- Asset Fraud
Assets are at the core of any business, and as such can be targeted for criminal activity. The first step in protecting your assets, tangible and intangible alike, is to take stock. Now that you know where and what all of your assets are, think about their security. Although something might not seem that valuable at first, it might be a goldmine for scammers. One such asset is customer data. Not only will you lose money, you might even be fined under a data protection act. Educate your staff on information security as this will reduce the chance that they will unknowingly make scammers’ lives easier.
- In conclusion
There is no universal solution that can be applied to all businesses, as every business has its own unique set of strengths and weaknesses. The one thing all businesses do have in common, however, is that they are all susceptible to fraud. In order to curtail potentially devastating financial consequences, you should be inquisitive and aware of where the threats may come from. If you know what to look out for, you are one step ahead of the scammers. Good luck, and stay vigilant.
