Is your small business vulnerable to fraud?
(NC) Organizations of all sizes are susceptible to fraud and scams, but it's the small and medium businesses that are the most vulnerable. According to Canadian accounting associations, SMBs represent the most important employment sector in the country, constituting 99.7% of all business establishments and two thirds of the private workforce, making them a prime target. Their limited ability to allocate resources to prevention and detection means that fraudulent activity can usually go unnoticed until a high price has already been paid.
“Another factor that makes small businesses susceptible to fraud is the limited overall knowledge that they have on the subject” notes François Ramsay, Senior Vice-President, Corporate Affairs and General Counsel for Yellow Pages Group. “ The majority of SMBs aren't aware of the different ways they could become victims of internal and external fraud, which makes it difficult for them to identify the chinks in their armour and to ensure prevention, detection, and appropriate response measures.”
To help increase awareness, Ramsay identifies some of the most common and other not-so-obvious types of fraud that exploit small businesses.
Employee Fraud: Unfortunately, studies have shown that even trusted employees, who don't fit the stereotypical profile of a thief, can engage in fraud-related conduct. If they have easy access to funds in a company that lacks appropriate control systems in the accounting and inventory departments, employees may give in to the temptation to take company resources when faced with personal financial stress and the right opportunity.
Impersonators: Some scammers send pretender invoices or try to pass themselves off as legitimate businesses that you usually deal with. SMBs may receive bills for print and online listings or advertisement which they did not order or authorize. Other order forms or invoices that seem to come from well-known supplierscould actually be from fraudsters who have made very subtle changes to that company's logo and name, hoping that you won't notice and that you will pay the invoice. Start-ups are especially vulnerable to illegitimate companies claiming to represent the government by offering them funding programs which are hard to understand.
Cyber Fraud: Most small business owners are aware of malicious software that poses online security threats. Spyware, malware, and trojan horses are all designed to gain access to sensitive information stored on your computer by tricking you to click a link or visit a fake website. Even social media platforms are potential risks with links sent by a direct message from fans' and friends' accounts. But fewer people know about mobile phone scams. Text messages and missed calls coming from numbers you don't recognize can charge a premium rate when you call or answer back. Small companies who rely most on their mobile phone for business are prime targets.
Identity theft: Scammers are assuming business identities in order to steal company assets, such as client lists, credit card information, and business relationships. Confidential electronic information and paper document thefts can be committed in the most mundane way, when computers are not properly password protected or files are left out in the open. Some businesses also do not take proper steps to safely destroy sensitive data, making dumpster-diving and hacking into company networks easy ways to access information.
Once businesses have identified their areas of vulnerability to fraud, they can then start taking periodic assessments of risks and developing a simple response plan to guide staff and management in cases when fraud is detected.
More information on this topic is available online at yellowpages360solution.ca/fraud.
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