After a year of tremendous challenges, small businesses are optimistic about their ability to bounce back and grow in 2021, according to the Capital One Small Business Confidence Survey. While much of the 2020 global epidemic was focused on 2020 and the expectation of economic relief, businesses need to ensure that they are protecting themselves from additional risks, namely fraud. In a recent survey conducted by the Association of Certified Fraud Examiners (ACFE), 90% of respondents say they expect fraud to increase in the next 12 months.
This could be a fake message claiming that your small business trademarks are expiring, or “customers” are requesting fake fee refunds from credit card companies. It can also be internal fraudulent employees. Whatever it is, small businesses are easy targets for criminals who believe that small companies do not have appropriate preventive policies to recognize fraud.
If you are a victim of a fraud scam, it is necessary to immediately report the incident to the Federal Trade Commission (FTC). To make reporting easier for small business owners, the FTC updated its consumer reporting website, just ReportFraud.ftc.gov, to include small customer reporting.
However, a proactive approach is required to fight fraud. Here are three common types of fraud and how to protect your small business from falling prey to them.
1. Cyber fraud
For any business with online activity, it is important to establish and follow a cyber security plan. According to the Federal Communications Commission (FCC), theft of digital information is more commonly reported fraud than physical theft. When you make your cyber security strategy, the FCC advises you to follow these tips:
- Train your employees. Establish basic security procedures for employees, including using strong passwords, protecting customer data, and other important information.
- Update all devices to the latest security software, web browsers and operating systems. Use antivirus software and firewalls.
- With so many employees now working remotely, create a mobile device action plan to encrypt data. Also make sure that each employee has a separate user account, so if there is a problem you or your accountant can detect any activity.
- Backup important business data and store information in the cloud.
- Secure Wi-Fi network with service set identifier (SSID) and password protection.
- Work with banks or credit card processors to protect payment information.
2. Payment and banking fraud
Payment fraud is characterized in many ways, such as bounced checks, unauthorized transactions, lost or stolen stock, and fake requests for refunds / returns. Most hackers target credit card users and credit card merchant accounts using a stolen card number. To prevent payment fraud, make sure you are aware of the latest fraud trends, encrypt payment transactions, and secure payment processors, such as Bill.com.
They will never ask you to provide credit card or ACH information over email or phone and will never send ZIP or EXE attachments (many of these are viruses attached).
Also, there is a risk of fraud in your online bank account, so make sure to know how and with whom you share confidential banking information. Payment solutions like Bill.com protect your banking information by allowing payments without ever having access to an online banking account. Bill.com builds in user-based permissions, which means you can control what employees can see.
3. Employee embezzlement
Unfortunately, employee fraud is a very real and costly risk for small businesses – especially in a struggling economy. To prevent employee fraud, check out these tips from Bill.com:
- go paperless. Paper invoices and checks are a security risk. Going digital reduces the chances of trusting hands with access to information, and you, your accounting department or your accountant can easily track every transaction.
- Implement payment control. You can enable fraudulent preventive accounting controls and authorization limitations using digital solutions.
- Automated Work Procedures. By computerizing the reminder and creating an audit trail, you ensure that nothing falls through the cracks.
- Remove the check (incoming and outgoing). Paper checks contain confidential information that cybercrocks can use to access your business financial information or accounts. When you receive and make payments electronically, you shield these numbers from unauthorized people.
- Increase the number of regular internal audits you conduct. Automated digital systems create an easy-to-trace audit trail.
Bill.com can improve your accounting process and pay faster with the help of payment invoices for your business. Also, Bill.com can help protect your small business from fraud. Try to make it risk-free today!
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