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How to Avoid Fraud in Your Business

by Yolando B. Adams

Fraudulent acts in a business can either be theft, asset misuse, and financial statement fraud. These acts can be damaging to your company and employees as well. They can also affect many functions in the organization like financial matters, impact on cash flow, and overall health of the business.

Avoid Fraud in Your Business

Follow these tips to prevent fraudulent acts in your company:

5 Common Ways To Prevent Fraud in the Organization

  • Have a Security Audit

Undergoing a security audit will let the cybersecurity experts in your business know where the weak points are against online fraud. Those vulnerabilities need to be patched so cyber criminals won’t carry out fraudulent activities like malware that demands a ransom to bring back access to the files. There’s no guarantee that if you pay the ransom, the criminals will fetch the data back. Eighty percent of the ones who paid even got hit with another attack.

Companies need to seek advice from security professionals on making the networks stronger against fraud attempts. Cybersecurity problems may seem overwhelming, but these preventative measures are worth the effort.

Remember that security audits are essential for your business to provide security standards that should be rolled out. It will also help ensure all regulations are followed and assess how your current security protocols are working out.

  • Know the Signs of Online Payment Fraud

Businesses should be aware of the signs of payment fraud, especially when it comes to marketplace payments. Some companies also struggle with their cash flow issues, and if illegal transactions last a long time, they can worsen these problems. Departments that handle bank accounts should check daily records and report all that seems suspicious.

You can also set rules for all job-related expenses and ensure to record all purchases. This will ensure that they will all get approved, and it will be easier to see strange transactions. You can also invest in machine learning software that spots the characteristics of regular account activity and alerts when there are suspicious activities.

Another type of fraud, known as payment interception, is when people take over a payment process. Fraudsters are now taking over e-wallets and social media transactions by intercepting the sales process.

  • Administer a Company-Wide Password Policy

A business-wide password policy can be effective in protecting your organization from online fraud. Cybercriminals can inflict more damage when passwords are accessible to them. Aside from it’s not safe to share passwords with colleagues, you should set strong long passwords with a mix of alphanumeric characters and special symbols.

Keep in mind that passwords are used for logging into communication platforms, bank accounts, and other sensitive information applications. If organizations don’t have best practices for password creation, instances of password-related fraud will further increase.

You can opt to enable two-factor authentication that requires users to have a temporary access code before gaining access to their account. For instance, when a user is trying to access a report on a bank website, they will receive a code to enter along with their password. This means that a password alone may not be sufficient, and two-factor authentication makes the account safer from fraud.

  • Educate Employees on Online Fraud

Companies should prioritize educating and training employees about online fraud.  Fraud can happen in workplace transactions too. For example, online lottery scams tell people they need to provide sensitive information like credit card details to receive the money. Some even target businesses that compel people to give information to stay “compliant” with the organization.

There was also a phishing attempt involving the Internal Revenue Service (IRS) that tried to get taxpayers to submit the information for updating their files. Ensure that employees know the warning signs of online fraud so it will be easier to avoid it and report to the proper employees.

  • Consider External Parties That May Cause Fraud

There are types of fraud that external parties like contractors and customers carry out. Customers can attempt fraud by sending back items to a store that were not purchased there or returning items for invalid reasons. Instances like this can cause damages for the company and lengthy prison sentences for the criminals.

All businesses can be prone to fraudulent online activities. However, proper awareness is always a great help for organizations to help them understand and be aware of online fraud signs. Follow the tips above to know how to prevent online fraud and how to fight back.

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