6 Effective Tips That Will Protect Businesses From Fraudulent Activity

By Allen Brown

Most people are familiar with the word "fraud" - a wrongful or criminal deception intended to result in financial or personal gain, which can be done to both individuals and organizations. Usually fraud is accomplished by using false information, manipulating the truth, or by a myriad of other illegal means. It is, at times, done with the intention to defame a person or business, and most often targets the individual or organization for money.

Nowadays business activities are at a huge risk of fraud, causing huge financial losses to the company. Fraudsters use several unethical means to target specific business practices, including payment method fraud, asset misappropriation or 'skimming', financial statement fraud, identity theft, insurance or banking fraud.

However, one of the most invasive and manipulative schemes is cyber fraud. It is a modern form of criminal activity also known as 'cybercrime'. It targets the business by stealing important data from business websites.

Here are a few important tips to protect your business from fraud:

Positive Interaction with Your Employees

How does business fraud arise? There are many possible reasons, but one simple answer is negligence. As a business owner, you are bound to have opportunities for personal interaction with employees on a daily basis. Rather than ignoring these opportunities - or neglecting chances to build healthy relationships as a team - you can take a few moments to go deeper. Tuning in with your employees regularly, in casual and formal sessions, will give you a chance to build trust and accountability. Plus, as you interact in positive ways, there is opportunity for you to pick up on any signals for potential problems your workers may be going through. Keeping your thumb on the pulse of your team's lives is a simple way to prevent openings for fraud.

It is rare to have fraud occur in a way that affects your business without internal help or the help of an employee. If your employee is not getting proper appreciation, or doesn't feel apart of the team, or isn't rewarded through bonuses and such, according to his hard work, then there is a chance that he may fulfill his needs via fraudulent means. So pay attention, take time to learn and care for the real needs and interests of your employees.

Hiring Experts

If you really want to prevent fraud from happening in your business, you will need some experts. These are the persons who have the expertise to make sure your business is run securely. They will make your business safer by maintaining a proper reporting system for finances. The experts can develop software for your business records and make sure only a few employees have access. They will be responsible to detect fraud of any type, looking for the signs and weak points that could affect your business, long before it becomes an issue. As mentioned, the modern risk for any business is the cyber attack. Only someone who understands how this actually works - like technology and security experts - can give you a way to prevent these attacks. They will maintain the cybersecurity for your business. It is the kind of networking crime that can steal your business records or money straight from your accounts, and that's not a risk you want to take.

Maintain a Risk Policy That Covers Business Fraud

The risk of fraud is always there while handling any business. As a business owner, it's imperative that you maintain a system that adequately prevents these crimes from happening from the get-go. A proper business security coverage must contain fraud policy at the bare minimum. This policy should be displayed throughout the premises so all employees will be well aware that there is such a policy in place. To be effective, the policy must define the consequences for anyone who is involved in any kind of fraud.

Seminars on fraud prevention should also be held for employees on a regular basis. This is one of the most simple and important ways to eliminate this risk. If an employee knows the punishment, he will think a thousand times before committing any fraud on your business.

Keep Updated About the Market

While running any business, you are engaged in the marketplace. The market is the platform that has customers, contractors, and other business competitors. It is wise to keep a close watch on what the market is doing, particularly your competitors in your arena. There are some business owners who may intentionally form a link or relationship with one or more of your employees, with manipulative intentions. This could include seeking to utilize them to gain access to your records, obtaining details about a new project you're working on, or getting the codes for your program development. The risks can be huge. It is wise to quickly ascertain the nature of the relationship, or link, an employee may have with a competitor and deal with it swiftly, as needed.

Shuffle Duties

The easiest and simplest way to prevent any crime is to shuffle the duties of employees frequently. No one can commit fraud immediately. They require deep information about the section they are going to do fraud within. Keeping an employee in the same section for a long time means allowing him/her to gather as much information as they can. If possible in your industry, consider creating a strategy in which shuffling work locations and duties will be the norm normal.

Preventing Online Fraud

If you are running an internet-based business such as selling any product online, you are at high risk of fraud. "Pay First” is the way to prevent such frauds. For example, someone orders the product, but once shipped, refuses to pay, or refuses to accept the product. These can only be prevented by using a pay first policy. There are several online-based frauds that you would be wise to familiarize yourself with in order to get ahead of them. Doing your due diligence now can save you a lot of hassle in the future.

Fraud may cause a huge loss to the business, but small precautions, as mentioned above, can save it. It only takes a few measures and a wise, watchful eye, to keep you protected from fraudulent activity and on target for continued success.