Protecting Your Business from Fraud, Scams and Theft

Most individuals are confronted with potential fraud on a daily basis. We ignore the out of area phone calls, delete the spam emails, and trudge through the multi-step authentication process to access our banking information. It’s become a part of daily life. Businesses have to contend with another set of fraud risks. Don’t let your business become a fraud victim. Avoiding business scams requires education, training, and implementation of protective measures.

‍

‍

The three most common types of business fraud include: vendor fraud, customer fraud, and employee fraud.

‍

‍

‍

Vendor Fraud

‍

‍

What kind of relationship do you have with your vendors? Are you dealing with the same person on an ongoing basis or are you ordering the cheapest possible product or service that you find online? Forging a continuing relationship builds trust in a vendor and can be worth a slightly higher price. By constantly shopping around, you can open yourself up to shady dealings.

‍

‍

Beware of payment schemes. If a vendor asks you to write a check for more than the purchase price and promises to refund you the overage on next month’s delivery, that’s a huge red flag for money laundering or tax evasion. Watch out for shipping schemes as well. If someone is trying to sell you something at a steep discount, it could be stolen property. Anytime something seems too good to be true, it probably is.

‍

‍

Always check your goods carefully, even if you’re pretty sure that you trust your vendor. Count product to ensure that you aren’t being shorted. If your specifications are for a specific quality, thickness, material, or weight, make sure you aren’t receiving an inferior version of the product ordered.

‍

‍

‍

Customer Fraud

‍

‍

Most people are aware that shoplifting is a known risk in business, but customers have gotten much more sophisticated about committing theft and fraud. Here are a few ways to safeguard your business against shoplifters and customer fraud:

‍

‍

• Ask for deposits. If someone is trying to buy your product on credit, ask for a large deposit.
  
• Require written contracts. A handshake, verbal agreement, or phone conversation does nothing to protect you. Consult with a lawyer to create a uniform written contract and implement it with every paying customer.
  
• Check credit card names on accounts. You’d be surprised how many employees don’t even look at the name on the credit card.
  
• Beware of people who know too much about your product or ordering process. This means they’ve done extensive research into your company, which is a fraud alert.
  
• Be alert for customers who don’t care about details. If they don’t care about a product’s color, size, or special features, there’s a chance they’re just trying to get whatever they can before you notice that they’ve scammed you.
  
• Hire conscientious employees, and train them regularly in fraud detection.
  
• Outsource your e-commerce platform. It is much easier for scammers to infiltrate a mom and pop website than an e-commerce giant like Shopify or Amazon.

‍

‍

Employee Fraud

‍

‍

Unfortunately, employee fraud is still quite common across many industries. Even long-trusted workers can commit fraud, embezzlement, or outright theft. The first step to avoiding employee theft is prevention. Don’t skip running a background check and a credit check on all of your potential employees. If you see any red flags, move on to the next candidate. Get references and actually check them. All too often, references go unchecked, leading to the hiring of less-than-ideal employees.

‍

‍

Consult with experts. If you suspect fraud within your company, it is well worth it to have your books examined by an accounting firm. They will go over your books with an impartial eye. JADDE Financial Solutions is an experienced bookkeeping firm that will handle the investigation with discretion.

‍

‍

Whether JADDE uncovers any fraud or not, we can guide you on how to adequately protect your business moving forward. We will also identify any existing weaknesses in your bookkeeping system (places where employees might be tempted to commit fraud) and make any appropriate accounting upgrade recommendations.