Business fraud is not a new concept. When it comes to generating fast cash, fraudsters are not selective. They are as likely to target personas as they are to a business.
Sadly, detecting business scams and financial fraud may be challenging. Moreover, falling prey to one will have devastating effects on your company.
Here are six common business scams and how you can avoid them.
1. Money Laundering
Have you ever heard of a “ghost employee”? This common trick occurs when a fraudster establishes a fictitious employment profile in order to receive extra pay, often by direct transfer into an offshore bank account. To avoid this form of fraud, you must thoroughly investigate all new recruits before releasing payroll funds.
Also, ensure that only explicitly authorized staff have access to payroll information and systems. There are also technological countermeasures for this kind of fraud. For instance, NICE Actimize anti-money laundering software can assist your firm in detecting any suspicious activities.
2. Phishing Scams
In phishing, an individual sends a fraudulent email, often posing as a bank employee or member of a trustworthy organization. These emails may be very convincing and trick recipients into divulging personal security information such as passwords, credit card numbers, and other sensitive financial information.
To prevent falling victim to these frauds, never click on links included in emails from unknown senders. In addition, tell your employees to be suspicious of any demands for personal information. You can also take further precautions by installing a web browser with anti-phishing capabilities.
3. Advance-fee Fraud
This is characterized by the solicitation for payment prior to the delivery of services or goods. Typically, a con artist demands payment by money order, wire transfer, or gift card.
To avoid falling victim to advance charge scams, avoid making upfront payments, particularly to new merchants.
4. Counterfeit Company Directories
Con artists have been known to provide apparently genuine services, such as a business directory listing. Due to the fact that so many businesses want to increase their consumer base and discoverability, such listings are often costly.
However, this also explains why these types of fraud are so popular among con artists. To prevent being a victim, do extensive research on the services your firm obtains.
Also, if you have any doubts, browse for customer reviews and read the terms and conditions thoroughly.
5. Overcharging Refunds
In this situation, a firm will be overpaid for a product or service. Immediately afterward, a con artist will seek a refund for the excess amount.
Sadly, most companies do not discover that the first payment was made using a counterfeit check or money order until after they have repaid the difference.
If your company ever gets a refund request, check that the cash has cleared your account before continuing. Additionally, never cash a check without first calling your bank to confirm its authenticity.
6. Fake Investments
In these scams, actors promise big returns on investments that seem to be low-risk. Their arguments are often highly persuasive and sound as though they have been thoroughly researched.
Research is the most effective method of protecting your organization from this fraud. Before committing money to a potential investment opportunity, you should always do a thorough investigation.
This involves confirming the qualifications of the investor, checking available reviews, and noting the terms and conditions of the transaction.
In Conclusion
Knowing the most typical types of financial fraud and what to watch for can significantly reduce your company’s chance of being a victim.
There is no failsafe strategy to prevent fraud. However, you can reduce your likelihood of becoming a target, by understanding how financial fraud operates and what red flags to watch for. When conducting financial transactions or investments, be vigilant and take as many safety measures as possible.
