Fraud-Proofing Your Business in 2018

Security issues such as identity theft, fraud, and hacking have increased over the last couple of years. This is hardly surprising, considering the number of assets and personal information being entered into the digital space on a day-to-day basis. Even the smallest of breaches can quickly snowball into a massive leak of user information and spell disaster for the company. Adding fuel to the fire is the fact that federal fraud regulations often don’t cover business accounts the same way they do personal accounts.

The protection of financial accounts goes as far as protecting personal accounts, which leaves the business accounts rather neglected in the unfortunate event of a security breach. The picture only gets bleaker once you realize that there are very little business owners can do to protect against internal fraud and most of the time, only become aware of it months after the fraud has already been committed. Let’s go over some of the more common types of internal and external fraud, as well as ways you can protect both your business and your customer's sensitive information.

External fraud

Small businesses and their accounts are often the main targets of external fraud. Personal accounts rarely have large enough balances, while large corporations pay enormous amounts of money for air-tight, top-of-the-line security measures, which significantly decrease the chance of experiencing a breach. Protection against external fraud includes:

• Educating employees - Phishing scams are the single most damaging type of security breaches and employee education and training play a key role in preventing them.
• Up-to-date protection - You need to make sure that your company firewall and virus protection are updated to the latest definition.
• Using latest security standards - If you wish to safeguard both your and your client and customer information, the best course of action for Australian businesses, for example, is to find a company authorized to work with and implement the latest standards for PCI DSS compliance in Australia.

Internal fraud

Internal frauds refer to security threats originating from inside the company. Most of the times, internal frauds center around former or current employees stealing money, products or valuable information. Whereas external frauds tend to trigger an immediate response due to various security measures and potential discrepancies in numbers, internal fraud can easily be accomplished, especially in companies that lack the adequate monitoring and security systems.

The most common type of internal fraud is embezzlement or misappropriation of the company and/or customer funds and only becomes apparent once the difference in numbers becomes large enough to notice. Protecting against internal fraud includes:

• Performing detailed background checks - Prevention is better than treatment, which is why you should perform an in-debt background check for every employee whose job includes accessing personal information and handling cash and payments from clients and customers.
• Limiting the amount of access - Never give access to setting up and approving payments to the same employee. Furthermore, you should only grant them as much access as they need to finish a task and accomplish their work.
• Hiring third-party auditors - The rule of thumb states that two pairs of eyes are better than one. An independent, third-party auditor can easily spot suspicious activities that your regular employees might’ve overlooked.
• Using an automated system of inventory - Automated systems make inventory control a breeze, however, you should also include a couple of random spot-checks just in case.