Business Fraud: Three Truths You Need to Know
The best reinforcement against potential fraud starts from within your organization.
In today’s technologically advanced world, fraud continues to be a growing pain for many businesses. In fact, some business owners have gone to the extent to name business fraud as their number one competitor. Business owners and managers can do more to help protect their companies by understanding three truths about business fraud.
Business Fraud Truth #1: It is real
Nearly 50 percent of businesses around the world have been a victim of various types of fraud or economic crime, according to a recent study from the multinational professional service company, PricewaterhouseCoopers.
Though it may seem daunting — thinking about all the potential thieves lurking in digital shadows — many financial experts suggest the best reinforcement against potential fraud starts from within the organization. As all businesses have cultures within them, some experts strongly suggest creating and developing a deep and robust fraud protection culture among all employees.
“It is crucial that every large or small business examine and re-examine what their internal fraud protection culture looks like,” says John Richards, senior vice president and director of Business Payments and Technology at Zions Bank. “Communicating and practicing strong internal procedures when collecting and transferring highly sensitive information is one of the best strategies you can make against potential fraud,” he says.
Business Fraud Truth #2: It is advanced
Not too long ago, committing fraud or theft required more risk and physical effort. Whether fraudsters were robbing a bank, forging checks or stealing identities, they required more masks, more handwriting and more in-person interactions. Frankly, it required a little more blood, sweat and tears.
Unfortunately, today’s victims of fraud are faced with criminals who are virtually 100 percent anonymous (even though traditional fraud schemes are still seen now and again). With the rise of the internet and advanced technologies, criminals can commit fraud from anywhere in the world leaving very little to no trace at all.
“In today’s world, even your own business email system can be used against you,” says Richards, who shared a story about a company that lost a vast amount of capital due to a fake email that appeared to be sent by a company executive. The FBI terms an incident like this as a Business Email Compromise, or a B.E.C. By monitoring email usage, criminals can then use social engineering tactics to trick unsuspecting employees and executives into transferring money.
Business Fraud Truth #3: It is manageable
Solutions and safeguards exist. It may seem like business fraud is completely unavoidable, but there are plenty of protective procedures and even products to consider implementing in your business when it comes to managing capital.
Other than setting up and managing passwords, usernames and various firewalls, Richards says a company should consider implementing a dual-authentication process, which requires more than one person to complete a transfer of funds. “Typically, one person in the company will initiate a transfer, and a different person will approve it,” says Richards. “You can even setup a process in which your bank will call you and verify the submitted transfers,” he says.
The minute you suspect fraudulent activity in your business accounts, you should call your bank immediately to freeze your accounts and speak with a bank representative about solving the issue. Richards also mentioned to keep separate business accounts for various purposes; for example, one business banking account should be used for payroll and another for business operations.
It is also a good idea to implement “best practice” procedures for employees who use computers and internet on a regular basis. A good safeguard against business fraud is to be sure to have a strong strategic approach when it comes to software update notifications, and overall internet usage.
“In short, the focus should be on internal approval procedures versus automation procedures,” says Richards, explaining that the time and energy that business leaders and entrepreneurs put into their company’s overall business fraud protection culture is a very wise investment.
Zions Bank has a network of professionals, resources and products readily available to help prevent fraud. One way to help protect your business from fraud is to implement a secured payment process. Learn more about Zions Bank’s Business Payments and Technology to get started with implementing a fraud protection plan for your business today.