Learn more about detecting and deterring fraud.
October is National Crime Prevention month and the perfect time to assess whether you’re taking the right steps to stop the various types of crimes that can harm your business.
Your employees can be the weakest link in protecting valuable information about your business and customers. Having a policy, training your employees and reinforcing the message can help keep your business safe from social engineering and phishing scams and prevent your sensitive information from falling into the wrong hands.
Bankruptcy fraud is a federal offense, but that won't help you if you're left holding uncollectible debt. Mortgage fraud is also a serious problem, particularly in light of the recent revelations of improprieties in their issuance.
The use of money laundering to allow illegal money to be run through legitimate and sometimes unsuspecting businesses has grown due to advances in technology.
Both the federal government and the states, as well as organizations and companies, provide resources to assist small businesses in the fight against fraud.
Fraud is often committed by business owners who misreport financial transactions by "playing with their books."
Mail and wire fraud involves crimes that violate federal laws because the frauds utilize the United States Postal Service or other interstate means of communication.
Ponzi schemes, pyramids, and pump and dump frauds are but a few of the colorful names given to the multitude of ways to separate people from their money through investment scams. A sophisticated investment scam, but a scam nonetheless, involves securities fraud. While some of these schemes have involved billions of dollars, be wary of scams involving much smaller dollar amounts.
Due to the nature of the insurance business, the opportunities for fraud are legion. Pay particular attention to insurance claims relating to autos, health, worker's compensation, and, workplace accidents.
Employee theft of inventory and supplies, and the unauthorized use of equipment, although not as frequent as cash theft, can be a major loss for many small businesses. In some cases, a non-employee accomplice may be involved, including a dishonest vendor.
Phony employee disbursements pose a significant fraud problem for businesses. These practices include frauds such as padded expense accounts, check tampering, payroll fraud, and false employee insurance claims.
Whether committed by employees, vendors or unknown individuals, the need to protect your business from fraud is an unpleasant fact of life for the small business owner.
Tools and strategies are readily available to small businesses for purposes of detecting, deterring and prosecuting fraud from whatever source. Both civil and criminal remedies may be available.
External frauds commonly originate with or involve customers and vendors. Common frauds include check and credit card frauds, shoplifting, vendor and telemarketing frauds, and fraud perpetuated by ID theft.
You can reduce employee fraud by controlling tempting environments and implementing internal control processes to deter wrongdoing.
There are numerous state and federal laws that a small business owner can use to to recoup losses due to fraud or unfair business practices.
Aggressive use of asset protection strategies is not illegal. However, crossing the line into fraud is illegal. If you want your transfers to hold up, you must avoid a finding of constructive or actual fraud. A finding of actual fraud often hinges on your motive, your financial condition and your attempts to conceal the transfer.
Virtual crimes are committed with increasing frequency as computers and the Internet are an integral part of people's personal and professional lives. Identifying and preventing cybercrime and Internet fraud should be on every business owner's radar.
Fraud can cost a small business a substantial amount of revenue. While you would like to think it could never happen to you -- and we hope you are right -- it makes sense to put plans into place to lessen the chances.
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