How Cybersecurity and Physical Security Go Hand in Hand

Protecting your small business from theft is far more complex than it used to be. Gone are the days when locking the doors was enough to minimize the likelihood of intruders. Today, companies face both physical and cyber risks, and it’s critical to understand how they’re intertwined. The problem with things Imagine that a thief breaks into one of your employee’s cars and steals a company laptop that contains your entire customer database. Here, physical theft can grant access to digital assets. Among the possibilities are that the crook: Is working for a competitor who’s looking for an unfair advantage, Will use the customer information to commit identity theft, or Might share the data with other criminals on the dark web. Or consider the risks involved with the...

Fraud Disasters Require a Contingency Plan Too

Your business probably has a disaster plan — or a set of procedures for dealing with a fire, natural disaster, terrorist attack or other emergency that could disrupt operations and threaten lives. Although a fraud contingency plan probably isn’t as critical, it’s still important for most companies to have one. Here’s how to draft and put a fraud contingency plan in place. Where are your weaknesses? Start by meeting with your senior management team and financial advisors to devise as many fraud scenarios as you can dream up. Consider how your internal controls could be breached — whether the perpetrator is a relatively new hire, an experienced department manager, a high-ranking executive or an outside party. Next, decide which scenarios are most likely to occur given such factors...

What You Can Do About Workers' Comp Fraud

Workers’ compensation insurance can provide medical care and financial assistance to employees who are injured or incapacitated at work. However, this important benefit is also subject to fraud perpetrated by dishonest workers. The Coalition Against Insurance Fraud says that 16% of workers’ comp claims are fraudulent, adding up to $9 billion in annual losses. Such losses hurt businesses, insurers and states. But you can help reduce the possibility that a scheme will be perpetrated in your organization. Common employee and employer schemes Employees violate workers’ comp rules if they file claims for injuries they didn’t experience or injuries or illnesses they did experience, but not at work. Workers’ comp fraudsters also might exaggerate the severity of their injuries or illnesses, or falsely state that they can’t work in...

Office Supply Fraud is Sneaky, But Preventable

Office supply scams are a tricky type of vendor fraud that generally use behavioral psychology and often depend on poor intraoffice communications for their “success.” Although they may not result in huge financial losses for defrauded companies, falsified invoices can add up to many thousands of dollars. Fortunately, you can help prevent them. How scams are perpetrated Office supply schemes typically begin as telemarketing fraud, with someone calling your business to obtain your street address and the name of an employee. Callers may: Ask for the “person in charge,” Claim to need information to complete an order, or Pretend to verify an office machine’s serial number. The goal is to get a name that will lend legitimacy to bogus shipments and invoices. For example, a supplier might ship...

Assemble a Comprehensive Cybersecurity Plan

Regardless of their size, businesses rely heavily on technology. Although your network and computer-related tools are essential to function, they’re also a potential liability because they can offer cybercriminals access to your company. To protect against this complex and ever-evolving threat, businesses must deploy a comprehensive cybersecurity program. Your arsenal You should already have a cybersecurity software package to protect technology assets. But to provide the best protection from hackers and other fraud perpetrators, arm your business with these seven additional weapons: 1. Strong passwords. Given a choice, most computer users select passwords that are easy to remember and input. But cybercriminals use password-cracking software that can guess simple passwords in almost no time. So require all employees to choose complex passwords that combine upper- and lowercase letters, numbers...

Watch out for Tax Misinformation on Social Media

Social media gets blamed for a lot these days — sometimes for good reason. Recently, the IRS issued a warning to individual and business taxpayers to beware of false claims about various federal tax breaks that appear on social media platforms. The common denominator of such claims is that they involve legitimate tax provisions for which most taxpayers don’t qualify. If you claim these breaks erroneously, it could delay a refund, require time-wasting correspondence and paperwork, and even result in penalties and criminal prosecution. Abusing legitimate tax breaks Intentionally fraudulent or even honestly inaccurate tax advice can come from many sources. These days, a lot of people put faith in social media “influencers,” who may not be qualified to dispense financial advice. According to the IRS, thousands...

IRS Reminds Car Dealers to be Aware of Phishing Scams

(As appearing in IR 2024-186) IRS reminds car dealers and sellers to be aware of phishing scams In light of the CDK ransomware attack, the Internal Revenue Service would like to remind car dealers and sellers to be aware of evolving phishing and smishing scams that could impact day-to-day operations of the business. In light of the recent ransomware attack against CDK, the IRS is warning individuals and businesses to remain vigilant against these attacks. Fraudsters and identity thieves attempt to trick the recipient into clicking a suspicious link, filling out personal and financial information or downloading a malware file onto their computer. Scammers are relentless in their attempts to obtain sensitive financial and personal information, and impersonating the IRS remains a favorite tactic. The IRS urges car dealerships...

Protecting Your Business from Real Estate Fraud

Whether your company acquires businesses that own real estate or you invest in real estate directly, fraud poses an ever-present threat. Buying and selling real estate is complicated, and it’s relatively easy for crooks to manipulate the process. To help mitigate real estate fraud threats, thorough due diligence is essential. Staying current on common schemes and red flags also may enable you to identify risky transactions before you put down any money. 5 schemes First, be aware of these five common real estate fraud schemes: Fake documents. Every real estate transaction requires extensive documentation. To make an acquisition more enticing, sellers could fake rent rolls, financial statements or other documents that indicate an asset’s profitability. Additionally, sellers might doctor environmental impact reports to, for example, hide the...

Is Your Inventory Missing - or Stolen? Ask an Expert

For many businesses, such as retailers, manufacturers and contractors, strict inventory control is central to operations. If you don’t track inventory accurately, you can’t effectively produce goods, meet customer demand and realize profits. Let’s say you’re performing a year-end inventory count and you come up short. Have you miscounted or have the items been misplaced? Or has someone stolen inventory? A professional fraud expert can help you get to the bottom of such discrepancies. Assuming an innocent explanation Before assuming theft, experts investigate whether missing inventory items were really stolen. Employees might have kept sloppy records or failed to follow proper procedures, resulting in “missing” inventory. For example, a company without a location assignment for each item, an effective method of tracking overflow stock, and a well-run returns...

Shoring Up Protections Against Expense Reimbursement Fraud

One of the types of occupational fraud schemes that became more costly for employers since the beginning of the COVID-19 pandemic in 2020 is expense reimbursement fraud. According to the Association of Certified Fraud Examiners’ (ACFE’s) latest report, this type of employee scheme now ranks fourth after corruption, billing schemes and noncash fraud. Although the $50,000 median loss of expense reimbursement scams is less than that of some other frauds, it’s also very commonly perpetrated. According to software company Emburse, nearly 25% of 1,000 workers surveyed admitted to passing off personal purchases as work-related buys. If you let internal controls slip a bit during the pandemic and you’re seeing more exaggerated or falsified expense reports, it’s time to reinforce your fraud deterrents. How they do it Employees often...