How To Reduce the Risk of Business Fraud in 2023

Business fraud is on the rise. The Federal Trade Commission reports nearly $8.8 billion in losses during 2022, up from $6.1 billion in 2021. Business fraud lawyers can help you if you’ve been the victim of fraud. But your best defense is to reduce the risk of fraud before it occurs. 

The following tips can protect you and your customers from scammers and other forms of business fraud.

The Effects of Fraud on Business

The Association of Certified Fraud Examiners' (ACFE) research discovered business owners lose 5% of their revenue to fraud each year. But beyond the immediate financial impact, it can be challenging for businesses to recover their public reputation, especially if they have to reveal to their customers there may have been a data breach. 

Simple Tips for Reducing the Risk of Fraud

Reducing the risk of fraud isn’t complex and doesn’t have to feel intimidating. The following tips can help you reduce the risk of fraud in the workplace and take a proactive stance against potential threats.

Practice Business Credit Card Fraud Protection Strategies

The Fair Credit Billing Act (FCBA) prevents consumers from being liable for more than $50 of fraudulent credit card charges. But businesses are not granted the same protections. 

To avoid fraud, limit the number of authorized credit card users, and check your statement regularly for unauthorized purchases. In addition, renew your credit card regularly to ensure your business credit card information can’t be used from one year to the next. 

Train your cardholders in business credit card fraud protection to ensure your team exercises caution when traveling or buying supplies.

Look for Warning Signs in Your Employees

The National Federation of Independent Businesses reports two-thirds of businesses will fall victim to fraud or theft from their employees. 

Learn to look for the warning signs. For example, do you have employees who exhibit a sudden shift in their work hours or habits? Are there any employees who are experiencing financial hardship? 

These may be early “red flags” indicating when a worker has undergone significant stress, which may prompt them to take desperate measures — such as stealing from your company.

Hire a Forensic Accountant

Make it a regular habit to have your business reviewed by a forensic examiner, such as a certified fraud examiner (CFE) or certified public accountant (CPA), who is certified in fraud forensics. 

You don’t have to wait until you suspect fraud has occurred. You simply have to make it public and vocalize how you regularly audit your books. This level of scrutiny may discourage employees from attempting to defraud your company simply for fear of getting caught.

Set Up Internal Controls 

No matter how large or small your business is, it’s important to establish internal controls, which can pinpoint discrepancies in your financial records or cash balances. For instance, retailers can assign separate employees to tally cash register receipts and prepare deposit slips, safeguarding against fraud attempts. Simpay also makes it possible to process all payment types safely and securely while meeting the highest PCI DSS compliance requirements.

The Power of a Positive Culture

Together, these tips can combine into a positive workplace culture to ensure employees are less likely to commit hostile or fraudulent acts. By maintaining strong relationships with your subordinates, you’ll learn to spot the warning signs of fraud before it can affect your business.