3 Tips for Protecting Your Business from Fraud

Unfortunately, fraud happens more often than we’d like to believe. Many business owners think its only the “big guys” who are vulnerable to a hit since they’re the ones with the deep pockets and massive databases—what does a small business owner have that a con artist would be interest in?

As it turns out, a lot. Names, addresses, personal identification information, proprietary data, and sensitive bank details are all vulnerable to theft caused by fraud. That’s the challenge when defending your business against external threats: the sheer volume of them. You can suffer major financial and reputational loss caused an employee, burglar, hacker, and/or fraudster. Sometimes, a single individual wears all those hats.

Consider the following example:

  • A devious criminal could apply for a job with malintent.
  • They convince you that they’re someone they’re not and earn your trust.
  • Once hired, they disable antivirus software on the company computer and install a program that lifts your access password upon login.
  • Using the hacked information, they can log into your bank account and learn your financial information.
  • From there, they could transfer funds to an offshore account in either one big push or micro installments.
  • Either way, they’ll be long gone before you’re even aware of the fraud, leaving you with no legitimate name to trace and persecute.

Does this seem elaborate? Maybe. Is it unrealistic? No. Situations like this happen all the time. Even apart from this type of high-level heist, “innocent” lies from your staff can result in consequences both big and small.

The key to success for small business in the South depends on you being hyper-vigilant to potential con artists who want to take you down or believe they can pull one over on you. Here are three tips you should follow to protect your business from fraud and ensure that your company isn’t the next victim.

1.Run Pre-Employment Screening

Hands down, the best way to defend against fraud is to thoroughly vet each and every applicant that applies for work at your company. Too frequently, business owners rush past this step with an eager need to fill a vacancy and get much-needed hands on deck, only to realize that their eagerness causes more harm than good.

A background check can provide you with insight to all sorts of details in your candidate’s past. Here’s how you can use them to detect fraudulent information you might have otherwise missed:

  • They check “No” on the box within the job application that questions whether they have a relevant criminal history, but when you run their name, discover arrest records.
     
  • In order to conceal a criminal history or evade tax contribution, they provide a fake Social Security number that’s flagged by the system.
     
  • They claim to have grown up locally in Savannah’s historic district and have lived in the South their entire life, but address verification reveals that they recently moved from California—perhaps where they are now evading arrest.
     
  • An applicant claims to be qualified for a role in finance, but a credit check for employment reveals a history of bankruptcy on file.

All of these problems could be detected by screening the applicant first.

1.Interview References

What happens when their report comes back squeaky clean? Unfortunately, your detective work isn’t over yet. You need to call their references and ask concrete questions that support their work ethic and level of experience they claim to have.

It doesn’t matter whether you’re hiring a contracted freelancer for a one-off job or you need a cashier for your new restaurant in Broughton; hiring the wrong, unqualified candidate (even if they’re not a criminal) could lead to poor work that negatively impacts your bottom line or your customers’ experience, leading to a loss in business.

2.Request an Assessment

Some fraudsters might believe that, as an inexperienced small business owner, you won’t be able to spot their lies, but the best ones will be prepared to pass on paper and will prep their “references” to say what they want.

Truly put them to the test and see whether they’re telling the truth by asking them to complete an on-site assessment. For example, if you’re hiring for an office administrator, a typing speed test will help evaluate their skill level.

Read up on all our latest undercover stories and never cut corners when hiring—the fate of your company may depend on it.