Business fraud is a serious concern for businesses of all sizes. From financial losses to damaged reputations, the repercussions of fraud can be far-reaching. According to Alloy’s 2024 State of Fraud Benchmark Report, 56% of surveyed businesses lost more than $500,000 to fraud in the last 12 months, and 25% lost over $1 million.
Learning how to recognize common fraud tactics and how to protect your business can go a long way toward keeping your business safe. Read on to learn more about common red flags and practical tips to prevent scams.
Recognizing Common Fraud Tactics
1. Personal or Strange Questions
Beware of unsolicited emails asking for personal information or security question answers. Fraudsters use this tactic to retrieve your login credentials or access financial accounts. For example, you may receive an email asking you to verify answers to security questions like your mother’s maiden name or your anniversary. Always verify such requests through a trusted source.
2. Redirecting to External Websites
Emails from unknown senders that direct you to external websites are often scams. These websites may mimic legitimate ones but are designed to steal your credentials or deliver malware. For instance, you might get an email appearing to be from PayPal, asking you to confirm your credit card information on a provided link. Always go directly to the official website through a known secure link.
3. Requesting Wire Transfers
Fraudsters may pose as charities, government workers, or even members of your company to request wire transfers. Never accept wire transfer requests over email without verifying via a phone call to a trusted number. For example, you might receive communication claiming the IRS demands immediate payment through a wire transfer. Always verify such claims through official channels.
4. Urging You to Click Links
Malware is the fastest-growing threat of 2024. Fraudsters often use emails with links to download malware onto your system. For example, you might receive an email seemingly from your CEO, asking you to watch an important video contained in a link. Always verify the authenticity of such requests before clicking any links.
5. Asking You to Buy Gift Cards
A common scam involves fraudsters pretending to be someone with authority, asking employees to buy gift cards and sending photos of the backs. For example, you might receive an email from your boss asking for gift cards urgently. Always confirm such requests through a trusted communication method.
How to Prevent Business Fraud
Immediate Steps for Suspicious Activity
If you suspect that a phone call or email is fraudulent, report it immediately. If your business has a security team, inform them right away. They likely have protocols for verifying emails or calls and will know the appropriate steps to take in the event of attempted theft.
Continuous Security Awareness Training
Prevention starts with awareness. Regularly train your employees on security best practices and establish a clear response plan for unusual or suspicious requests, like a sudden password reset demand from a “client.” If your business lacks a security team, consider investing in one to safeguard your resources.
Trustworthy Vendor Partnerships
Your vendors also need robust security measures. Perform due diligence to ensure they don’t pose a risk to your business. Regularly audit vendors and assess their security protocols. Minimizing the number of approved vendors or automating supply ordering can help your accounts payable team spot fraudulent invoices quickly.
Adhering to Cybersecurity Best Practices
Implementing simple measures, such as multifactor authentication (MFA), can prevent the majority of account hacks. Unfortunately, many small to medium-sized businesses still do not use MFA. While fraud is a complex issue requiring a multifaceted approach, following best practices as outlined in frameworks like the NIST Cybersecurity Framework is important.
Preventing fraud is vital for safeguarding your business from harm. By following the five tips shared in this blog, you can reduce risks, boost security, and promote a watchful environment in your company.
About NATIONAL
Committed to their customers since 1927, NATIONAL offers a range of Managed Services including IT Support and Augmentation, Cybersecurity, UCaaS, Managed Print, Document Management as well as VoIP/Telephony, Cloud Services, Printers, Copiers, MFPs, Product Print Equipment and SmartBoards.
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