Prevention and mitigation strategies can mean the difference between a thriving enterprise and a shop closing its doors. Fraud incidents tend to disproportionately affect small businesses, since the relative size of a financial loss makes up a much bigger chunk of revenue compared with larger organizations.

  1. Be thorough when hiring. Internal staff accounts for 37 percent of fraud, so your ability to protect your business starts with recruitment.
  2. Establish a code of conduct. Employees are less likely to cross the line if they have a strong sense of company rules and expectations.
  3. Educate and cross-train your employees. Your staff must be aware of all the ways a company’s financial health and reputation can be compromised. Rotate job responsibilities so that one person does not remain in a sensitive position for a long period.
  4. Keep close tabs on finances. Check bank and credit card statements monthly and know how much it costs to run your business, as well as how much money is coming in.
  5. Bolster computer security. Protect your network with firewalls, anti-malware and email phishing detection products.
  6. Be aware of regulatory changes. Pay close attention to local, state and federal requirements for protecting customer information and reporting fraud.
  7. Use checks with security features. Checks with security features such as holograms, thermochromic heat-sensitive ink, chemical reactive paper and a true watermark make duplication difficult for fraudsters.
  8. Use a fraud detection monitoring service. Having a set of eyes on the business can help detect fraud so you can minimize the damage.
  9. Subscribe to a fraud remediation service. Fraud remediation advocates can determine the threat, investigate acts by unknown parties or employees of the business, and spearhead the investigations needed to prepare cases and speed the path to a resolution.
  10. Look to experts to implement a response plan. Work with a recovery service that can provide an action plan for the critical first 48 hours after the discovery of a security breach or fraud.

Source: Andy Shank, “Small business has a big fraud problem.” BAI Banking Strategies Executive Report, January 2021