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How to prevent fraud and protect your business


Running a business is a mammoth task, even when things are running smoothly. To ensure your business has the best chance of success you need to prepare for unexpected challenges and potential problems. A leading concern for businesses today is fraud. It is so prevalent that it can actually be considered a part of your overall business cost. Fraud has become such a monumental problem that it could lead to the critical failure of your otherwise successful business.

At MarisIT we strive in providing our clients with accurate and actionable information so that they can make better credit decisions. So we have created a comprehensive article breaking down the types of fraud your business may face and how to deal with it. Preventing fraud may seem like a daunting and unachievable task, but with the right information, you will be better equipped to do so.

Types of fraud

There are many different types of fraud that you need to be aware of in order to protect your business. Your employees and customers are just a few people who might take advantage of your business.

Consumer fraud

There are a variety of ways that consumers can defraud your business. This could be writing bad cheques, using bad or stolen credit cards or returning items not purchased to get a refund.

Employee fraud

Employee fraud is a serious risk all businesses undertake when hiring new people. In the initial hiring process, potential employees may lie about their qualifications and work experience. This can be seriously detrimental to your business in terms of financial costs due to errors and required training. This can also severally impact the value and reputation of your business because you are not hiring the right people and doing your due diligence.

However, potential employees are not the only risk, even old employees can commit fraud against your business. Payroll fraud is a common type of fraud your employees may commit. This can include asking for pay advances that are not repaid or lying on timesheets.

Digital fraud

Due to the exponential growth and expansion of the Internet, the opportunities for cybercrimes have in turn grown and expanded. Identity theft is a leading concern for individuals and businesses alike. The recent wave of data dumps and hacks have businesses very wary.

Recently the CIPC were in the news for possible phising concerns. They are responsible for registering South African companies and co-operatives, as well as keeping a registry of their directors and contact details. The CIPC used to be CIPRO but ceased to exist in 2011, however its websites remained. In August this year, the websites registration expired, www.cipro.co.za was registered to Mr Miguel Gomez, a resident of Meoquoi in the northern Mexican state of Chihauhua. This also gave him access to the @cipro.co.za email account. According to Ettienne Burke-le Roux, a lead security analyst, this posed a major risk as “this opens an effective avenue for phishing attacks against business owners. An apparently legitimate email from @cipro.co.za email address could easily contain a phishing link to a cloned website of the CIPC. If the user can be convinced to enter or update their account details, the new website owners will have access to all of that information. This poses a major security risk for these users.”

Fraudsters are looking for opportunities wherever they can, and they are getting increasingly good at it. Identity theft could cost your business thousands of dollars. Clicking on one wrong link or opening one wrong email could expose you and fraudsters could steal your business’s identity and use it to access your credit.

How to deal with fraud

The number one way to protect your business against fraud is to be proactive. You cannot burry your head in the sand and hope for the best. Prevention is always better than cure, as such you need to be constantly vigilant and aware of the trends in scams and fraudsters.

Here are a couple dependable ways to keep your business protected:

Run a background check

Background checks should be an essential part of your hiring strategy. Background checks are critical when engaging with customers and potential clients. We have a whole article on the importance of background checks that you can check out here. Essentially, this ensures you are doing your due diligence and decreases your liability. You need to ensure that your business is hiring the right people who do not have a criminal history.

Do a credit report check

Credit reports will bring up any red flags associated with a potential client or employee. If they have defaulted on any payment or been convicted of any crime, you will be able to find this information in a credit report check.

Additionally, you can make use of our partnership with the SAFPS to give you additional fraud prevention strategies. The SAFPS has saved its members R8 billion in attempted fraud in the last 5 years.

Social media audit

When you are considering hiring someone, review their social media profiles for any items damaging to reputation, especially any past animosity against their former employer. As we all exist in a digital world, it is important to look for red flags on your potential employee’s social media accounts.

Implement policies to safeguard your business

Institute an employee policy that outlines expected employee behaviour anytime they are representing the company, including any mention on their social networks. When it comes to your payroll have clear policies set up that safeguard your business against potential fraud. Your business should enforce rigorous key control and computer-system access.

Fraud detection and prevention should be an ongoing initiative that your business pursues in order to battle this growing problem. Get in touch with MarisIT today to find out how we can help protect your business and help you make informed credit decisions.

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