How easy is it for somebody to defraud your business? We look at the five ways that your business can be defrauded in 2021.
As a business owner, you work hard to grow your brand and serve your customers. Unfortunately, there’s a chance that criminals are working equally hard to relieve you of the fruits of your labours.
With the rapid advancement in technology, people are becoming ever more sophisticated when it comes to fraud. From investment fraud, which wilI require an expert to help with investment fraud recovery, to something as simple as payroll fraud, there’s plenty to look out for. In this article, we’ll take you through the five ways your business can be defrauded…
1. Investment Fraud
Investment fraud can take a number of forms, but usually involves a criminal posing as an investment professional and calling members of the public (often the elderly or the vulnerable) to convince them to invest their savings in schemes which don’t exist.
These criminals will often put considerable pressure on the victim to make an investment on the spot. They will use tactics such as fear or emotion, for example convincing the victim that the investment will allow them to do more for their children and grandchildren.
Needless to say, once the victim has handed over the hard-earned cash, the ‘investment professional’ will never be heard from again.
While this is prevalent with individuals, it’s also something which happens with business professionals. One way could be a member of your company lying to potential investors about the company income to score a deal with them.
Otherwise, it may be that you want to invest some business funds into another company or financial entity, and they lie to you about their worth.
2. Identity Theft
This kind of fraud costs UK businesses £2.7 billion every year, and is often shockingly easy to execute. The identity thieves – who might be hackers, competitors or even your own employees – copy your company’s branding and identity and steal your data and other information in order to steal your company’s identity.
The perpetrators will then use this fake identity in order to gain credit and obtain assets. These criminals will use technology in a number of ways to obtain your information, and your only defense against this is a robust cyber-security system designed to keep these hackers out.
3. Payroll Fraud
As a business owner, your brand relies on your employees working hard to help you achieve your goals. Unfortunately, those employees are sometimes the culprits when it comes to defrauding your business.
Payroll fraud racks up a staggering £12 million in losses for UK businesses every year, with one of the most common forms of payroll fraud being ghost employee fraud. This kind of fraud is set up by a payroll employee and involves the creation of a ‘fake employee’.
The dishonest employee will then add the fake employee to the payroll, funnelling their salary into an account set up by themselves.
Within larger companies, it can be extremely difficult to spot this kind of fraud until it’s way too late.
4. Held to Ransom
One of the most common kinds of fraud committed in the modern world is that of Ransomware. Already a major problem in the UK, this kind of fraud hit record numbers in 2020 when a huge number of employees were working from home, often without sufficient security.
With this kind of fraud, a hacker will embed a harmful virus into your system or network and then demand a ‘ransom’ in order for it to be removed. This can be extremely harmful for businesses in lost man hours, as well as breached financial and data security.
A business’s first line of defence here is to ensure that they prioritise cybersecurity, including malware detection software.
5. Invoice Fraud
Sadly, another type of fraud which will usually be performed in-house is invoice fraud. A relatively unsophisticated method, invoice fraud involves a payroll or sales employee creating fake invoices for goods or services which were never ordered or bought by the company.
The employee will often set up a fake business account for these invoices to be paid into in order to take the cash for themselves. To avoid losing out to this kind of fraud, businesses should have robust checking processes in place, with only trusted employees authorised to sign off on payment of invoices.
Fighting the Fraudsters
Fraud can have a huge impact on a business, leading to loss of revenue, increased downtime, and a loss of trust in employees. In an age where we rely so much on technology, businesses need to be making security their number one priority in order to stop fraudsters in their tracks.
This should include regular security audits, proper vetting of employees, and restriction of access to sensitive and important information. By giving each and every one of your employees ownership of your company’s security, you can help to avoid fraud by spotting attempted breaches before these become an issue.
If your business has been a victim of fraud, it’s important to act fast and enlist the help of a professional. Whether it be a payroll, invoice or investment fraud recovery firm, you’ll have the best possible chance of getting your money back with an expert’s help.