Protect Your Small Business from Scams
By Kristi Vaughan
A small business can be just as susceptible an individual to Internet fraud and other scams ... and perhaps even more so, since the exposure increases for every employee given decision-making authority or granted access to the computer and company’s financial matters.
Types of fraud
The types of scams and fraud to which a business can be subjected are limited only by the cleverness of the con artist and susceptibility of the business. Among the more common ones, according to the National Fraud Information Center, especially for small businesses, are those involving:
- Advertising - Fraud occurs when you pay to advertise on placemats, calendars or other items that the “seller” says will be distributed in your area but, in fact, never are.
- Bogus invoices - A con artist sends out a bill for items or services that were never purchased.
- Calling card charges - The company calling card is used to make long distance calls by someone outside the company.
- Charitable solicitations - Con artists fraudulently seek donations by representing themselves as being from a local fire or police department or other group.
- Internet services - Services are purchased in advance to help you establish a Web page, a banner ad or other Web service but the service is never provided.
- Loans - Offers are made to provide unsecured loans, if you pay a fee in advance.
- Office paper and toners - Offers are made to supply paper or toner at an exceptionally low price but the products either never arrive or are poor quality.
Take these precautions
As is the case with individuals, there are several guidelines businesses can follow to protect themselves against fraud. The National Consumers League recommends the following:
- Do business with companies you know and trust
- Understand what is being offered
- Check all bills and invoices carefully
- Guard your financial or other account information
- Educate employees on how to avoid scams
Safeguard internally, too
Of course, fraud problems can occur internally as well. Dishonest employees can wreak havoc on unsuspecting business owners. And the effects can be devastating if you leave computer systems unprotected from hackers or unauthorized use.
You can help prevent internal fraud by performing thorough background checks on all potential employees, regularly reviewing financial records, establishing internal financial and inventory controls that will alert you to wrongdoing and monitoring employee use of company equipment and materials for non-company purposes. Audits by trained accounts can also spot potential problems.
The American Institute of Certified Public Accountants additionally recommends that steps be taken to safeguard computer systems against hacking and unauthorized use. These include:
- Difficult passwords. Choose a password that is at least eight digits long and uses a mix of numerals and upper- and lowercase letters.
- Update your virus protection program regularly.
- Upgrade your software security as the software provider issues updates.
- Use filtering techniques.
- Use firewalls.
Reporting scams
If your think your business has been the victim of a scam, report it to your local law enforcement authorities. You also can file a complaint with the National Fraud Information Center which can relay the information to the appropriate law enforcement agency. Complaints can be filed online or by calling 1-800-876-7060.
