The number one thing every business owner fears, is getting scammed. Whether that be through email or call or by a trusted employee. In reality, thousands of businesses and people are scammed or defrauded every single day.
There is a common misconception that if you get scammed or experience fraud that it must be your fault, that you were careless or stupid enough to fall for it. However, the truth is that even the smartest and most vigilant people get scammed too. It is becoming harder these days to detect fraud either from external or internal sources within our companies, but there are still things you can do as a small business owner to help protect your company.
Types of Fraud and Scams
As the years have gone on, and the internet has become ever increasingly ubiquitous in our lives, scammers have found more and more ways to scam and commit fraud. With that it means that you need to remain on the lookout for these types of fraud.
Scam Calls and Emails
Everyone has heard of scam calls and emails, but the question is, do you know what to look for? Scammers have begun to adapt to the world around them and have created more convincing and sophisticated ways of scamming you over the phone or through email.
Scam calls often come from “companies” that your trust. For example, you may get a call from your bank claiming that your information has been stolen or that they need you to renew your credit card. Often, they will have some but not all the information about you and your bank account and will ask for your credit card information to verify that it is you or to cancel your account. The issue with this kind of scam or any other over the phone involving your personal information is that they are taking advantage of the fact that you are scared. Most of the time people are so worried about their information being stolen that they give it away to a stranger who claims they can trust them or that they are just trying to help.
When it comes to email scams, there are many different types. Everything from an African Prince asking for money, to fake invoices. Most email scams are easy to detect and delete or ignore, but sometimes they can be hidden in plain sight. These days many companies are experiencing being sent fake invoices, and without thinking their financial teams will just pay it like all the others.
Other times companies will receive emails from fake manufacturers claiming they can give them a great deal on the same product they already use, but never have any intention of sending them any product. Emails are easier to fake and easier to fall for as many business owners answer hundreds a day without thinking.
Point-of-sale (POS) System Tampering
Not every company uses a POS system, but for those who do keep an eye out for potential scams. There are two kinds of scams that can occur with your POS system, online and physical.
Online are the most frequent ways POS systems are taken advantage of. These days it can be very easy for scammers to hack into your POS system and steal customer information or even company information. Many people forget that their POS system is connected to the internet and can therefore be accessed remotely. This allows hackers to get in and steal whatever they want without ever being detected.
The other way is through physical tampering. Either through attachments or false chips, card readers can be tampered with. Scammers can use fake cards or fake readers to steal your customer information. If your machine has been tampered with it can sometimes be hard to tell as many attachments blend in with the machine itself. However, the reader may start saying the card failed or the system itself may shut down, or the card reader may suddenly stop working all together. All are signs of tampering and may call for further investigation.
Everyone knows what embezzlement is, but not many people know what to look for. When it comes to money and accounting you are placing a lot of faith in the person you have in charge of it. So, it is fair that many people don’t wish to think bad of that person or accuse them of fraud, even when signs are present. When embezzlement does occur you often begin to see the signs in your money trails. Clients or customers may begin to contact you about unknown charges on their cards, or unpaid invoices. Keep an eye out for any unknown money disappearing.
How to Avoid and Prevent Fraud and Scams
Avoiding fraud may seem easier than it really is. Fraud and scams are sneaky and hard to detect, so it can be hard to avoid something when you don’t know it is already happening. Instead, these are a few measures to put in place in advance to put up as many walls of protection before it is too late.
Security Protocols and Checks
Security protocols and checks may seem obvious and feels like it doesn’t need to be said, however, it can be surprising as to how many companies have unfit or un-updated security measures. There are a few key security checks you as a business owner and a company should be doing regularly.
First, regularly change your passwords for all company-related accounts. I know this sounds tedious, time consuming, annoying, and hard to remember, but in the long run it will be worth it. The number one-way scammers get into accounts is through stealing someone’s password, this often occurs because people reuse or never change their passwords. By requiring your employees to regularly change them, you are keeping their information and the company safer.
Second, educate your employees on what to look out for when it comes to fraud and who to notify if they find anything. Have this implemented into their training have them regularly re-trained as scammers are always adapting. Often, scams are left uncaught because employees don’t know what to look for or are scared to notify their superiors out of fear of being known as the person that got someone fired. By implementing this in training and informing employees to notify when something occurs you are creating a safe space within the company.
Finally, conduct regular checks on all your systems. Make sure you or someone else is conducting regular checks on all systems you use within your company. Look out for any malware, tampering, anything suspicious or out of the ordinary. The smallest thing can lead to big problems. Not only should you be doing system checks online, but also conducting physical checks. Check for any unknown or out of place devices on things like company computers, card readers, computer servers, and any other hackable electronic device within the company. Doing this on a regular basis may help prevent scams or maybe help catch scams before they can cause too much damage.
Work with Professionals
Working with professionals can mean a few things. In this instance there are two types to focus on. The first is professionals in the sense of accounting or auditors, and the second refers to good professional employees.
Bringing in a professional like an accountant to go over your finances is a great way to detect and prevent fraud. As a small business it may be hard to afford outside help, especially when you are just getting started, however, having someone come in occasionally to help or conduct a surprise audit is entirely worth the money. It may seem better to save that money for something else but spending that money to look for and prevent fraud now can save you thousands of dollars in the future.
Hiring good and professional employees may seem obvious, but these days many people lie on their resume or may seem better than they are. Make sure to conduct thorough background checks on all potential employees and vet them with reliable references. If a resume seems off or you simply feel unsure about hiring someone, go with your gut and air on the side of caution.
Now this may seem like the most obvious idea, however, it can be easy to forget and overlook. When you are just starting out there are a million different things to think about and always remember and getting insurance can be easily overlooked. Go out and make it the first thing you do when starting your business, or if you know you are going to forget, put someone else in charge of doing it. On top of that make sure to check and keep an eye on making sure your insurance is up to date. The last thing you need is for something bad to happen, and your insurance is out of date, or the information is incorrect.