How to Protect your Business from Fraud

Opening and running your own business can be very rewarding. You’re the boss and make all the decisions. But is your business safe from fraud? With the advent of the internet and other advanced telecommunications, con-artists have become more creative which is why entrepreneurs need to be extra vigilant.

Today we’ll shed light on some types of scams you should know about. We’ll also take a look at what you can do to protect yourself and your business.

1. Executive Level Scams

Top-level management and senior executives are common targets for this type of scam. These employees are targeted because they have the authority to sign for large amounts of money.

What happens is that the scammer knows that the executive is away from the office on a business trip. He then hacks into the company’s email server and sends a message from the executives email saying that money is needed to get the contract or close an important deal etc. The email will also say that the funds need to be sent to a third party account.

Since the email comes from the executive, the other employees usually don’t suspect foul play and simply wire the money.

How you can protect yourself

Make sure your employees know that they need to verify all requests for funds regardless of who made the request. They can call the executive in question and even take the request to higher management. Having a multi-level process for releasing funds will greatly reduce the chances of becoming a victim to these types of scams.

Try to make sure that the general public doesn’t have access to information about your top-level executives.

2. Business Operation Scams

Hustlers might try and bill your company for office supplies you never ordered. They could pretend to be a government inspector and tell you that you need to replace your first-aid kits or fire extinguishers.

They could also send you offers for listing or marketing your business in various directories or magazines. Then they might call to confirm your company address and billing information. Soon after, your accounts payable gets an invoice for the service and usually ends up paying.

How you can protect yourself

Have a list of regular suppliers ready at all times. Inform your staff that they need to verify invoices from any new suppliers. They should check if the goods were received or the services were actually rendered.

Keep in mind that con-artists are very good at creating company letterheads and logos that look genuine. So limit the number of employees who are authorized to pay bills.

3. Scams Related to Sale of Products

This one is especially important for people who run online businesses. The scammer poses as a buyer, he wants to buy your product and agrees to pay through Paypal or through some other online method. He might even provide an email notification saying that the payment is pending and will be released as soon as you provide a tracking number for the goods.

A tracking number is only created when goods are being shipped so the delivery is on its way to the buyer before you find out that the email notification is fake.

In some cases, the scammer might ask for a fee to open a new Paypal or bank account because there’s been a problem and the transaction can’t go through his old account. This way you lose both the product and the fee.

How you can protect yourself

Remember that you should never pay or send someone money to get money. Also be cautious of buyers from distant countries.

4. Identity Theft

Identity theft means someone has stolen your passport details, driving license information, bank account information, passwords, personal details and even your Social Insurance Number (SIN).

When a hustler has this information, he can pretend to be you and make transactions in your name.

How you can protect yourself

Use complicated and strong passwords for all your online accounts. Never give out personal information over the phone or email. Always make sure to shred and destroy documents with information like addresses, mobile numbers and SIN’s.

The same goes for old and unused computer disks, USB’s and hard drives.

Don’t forget, your CPA and lawyer can also help you in setting up a secure business structure and internal checks which minimizes your chances for becoming a victim of fraud.  Get in touch for a free consultation today.

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