How to Fight Small Business Fraud

When the economy slows down, criminals get clever. Instead of relying on theft and thuggery, scammers have developed some insidious, new techniques to steal money from your small business. Dr. Martin Bressler, currently a professor of marketing and management at Southeastern Oklahoma State University, estimates that the typical company owner loses $190,000 for each instance of fraud uncovered. Academics and law enforcement officials recommend four steps that you can take right now to prevent your business from falling victim to savvy scam artists.

4 Ways to Reduce Small Business Fraud

1. Validate incoming checks against invoices and price lists

One of today's most common small business scams involves front line workers who process inbound cashier's checks or business checks. The checks look real, often passing initial phone or online verification. However, the amounts on these checks don't match up to the customer's order or balance.
A sheepish-sounding customer may call or email, asking for a refund of the difference on his or her mistaken payment. That, according to the Office of the Comptroller of the Currency, often signals a potential scam. Because banks can take weeks to invalidate a fraudulent check, a criminal can get away with your cash and your goods, leaving you with a hole in your bank account.

2. Establish dedicated bank accounts for wire transfers

If your small business sometimes accepts wire transfer payments from customers, a simple policy change can help keep your funds from disappearing. With the right information, a fraudster can request outgoing transfers from your account, or simply forge checks with your company's information.

Ask your business banker to establish a free checking account dedicated solely to wire transfers. That way, you can distribute an account number and routing information to customers, knowing that criminals won't be able to drain your account with unauthorized ACH transactions.

 Click here for more two more ways of reducing small business fraud.