Fraud and theft can happen to anyone, including you. Most often people don’t talk about it in social settings and much less around the office. We don’t want to seem paranoid among our business peers or create an air of concern for our clients. However, lately the tide has turned and more professionals are discussing the topic as a point of risk management while learning that fraud comes in many forms and can impact everyone anywhere.
Too often now, we hear of a business that had its confidential data files stolen or hacked into via cyberspace, or embezzled by employees or were cheated by their customers. We read stories about unsuspecting seniors or young families who were swindled by offers that were too good to be true or victimized by someone who seemed to be reasonable and legitimate.
Small and mid-sized businesses are often the preferred targets of fraudsters and thieves who seek vulnerable companies with limited security measures and lax IT security policies. In 2009, a PriceWaterhouseCoopers survey found that 76% of crimes against businesses were committed by insiders. These crimes consisted of accounting fraud, ID and data theft, fraudulent worker’s compensation claims and many others. Businesses are negatively affected by customers that write bad checks, submit false personal injury claims and use stolen credit cards. Vendors also contribute to this dilemma by sometimes falsifying the delivery of merchandise and services.
It is important to acknowledge and confront these fraud and security breach issues. Updated policies and procedures can help identify and deter fraud from your business. Some areas to focus on might be having mandatory pre-employment background checks; separating the responsibility of regular audits of accounting records, account transactions and inventory; and implementing managed access to vital records and internet sites.
We too as individuals can take steps to protect our personal assets, credit and privacy. In the last three years, we have consistently heard about investment schemes, mortgage fraud and ID theft: The Madoff investment Ponzi scheme directly affected 4,800 clients for an estimated $64.3 billion; the F.B.I. reported that mortgage fraud investigations grew by 72% from 2008 to 2009; the Federal Trade Commission placed ID theft at the top of consumer complaints in Arizona for 2007.
These are daunting statistics, but not impossible to manage. Take the time to know and utilize your banker, financial advisor, accountant and attorney as independent resources that can advise you on one another’s services. Take charge and do your own research by checking the credentials and industry associations of those who offer you services or products.
Learn how to use the internet with caution and manage who can access your information before you introduce yourself to the cyberworld. While we might not tell a stranger our birth date, phone number or where we work… we’ll write it on our social media wall or home page. There are currently 155 million people in the U.S. that are using Facebook and the highest user percentages are those 18 to 54 years old. That’s great for social media, but it’s also great for those who want to steal your identity. We also need to be cautious about emails we receive loaded with spyware, keystroke tracking malware, and viruses. Make sure you have updated anti-virus and anti-spam software installed on your computers… yes, even on your smart phone.
There are free on-line videos, college classes and professionals for hire that will guide you step by step or review what you need to secure yourselves against fraud and theft. You can also search the websites of the Federal Trade Commission, the F.B.I and your state’s Attorney General.
Humberto N. Stevens is a vice president at Commerce Bank of Arizona, an Arizona based community bank specializing in serving small to mid-size businesses in Arizona. He specializes in business development and commercial credit. He can be reached by calling 382-5572 or by e-mailing email@example.com.