The Two Fundamental Rules Of Business Fraud Prevention

There is something about being the victim of fraud that makes it a particularly galling crime to suffer. Others are worse, objectively - it’s always better not to suffer physical harm - but being defrauded hurts in a whole different way. Feeling like someone has outwitted you, that you have been na├»ve, and you might not be as flameproof as you thought you were, can make you second-guess every decision. In business, this can be a disaster.

It’s tricky, because you may be minded to blame yourself. That won’t get you anywhere, especially if you are the victim of sophisticated fraudsters or scammers who got to hundreds of victims at once. This kind of sophisticated crime has been known to affect multinational companies and government bodies, so it’s not a case of inadequacy letting you down. Nonetheless, there are things that you can do to make it less likely - and failing to do them could have repercussions beyond the immediately obvious.

Bear in mind that sometimes, you won’t even be the target of fraud, but can still be a victim. Unless your own protections are solid, and regularly updated, you could lose money, the confidence of your customers and even your business. It’s vital, then, that you’re always on the lookout.


#1: Taking Payments - Have A Policy And Make It Rock-Solid



You know when you’re in a store, or online, trying to make a purchase and your chosen method of payment isn’t accepted there? Doesn’t that drive you up the wall? Ranting won’t get you anywhere, though, because it’s their policy. Take it or leave it.

While the concept of making it harder for a customer may be against all business principles, it makes more sense from the point of view that they’re trying to make it harder for people to pull a fast one. All methods of payment are open to fraud - it’s hard to believe anyone takes checks these days, for example - and it’s not insanity to err on the side of caution. As a minimum, make sure your insurance covers you against card fraud, and if you handle cash make sure you have the latest forgery-detection devices available.


#2: Money Laundering - Don’t Be An Accessory


Terrorists do it. Drug dealers do it. Bank robbers do it. It’s called money laundering, and it’s designed to turn ill-gotten gains into clean cash. The way they do that is by running it through legitimate businesses. Businesses like yours, but hopefully not your business. If you use the right products for verifying identities, and apply Know Your Customer principles, then you’re better protected. Additionally, it’s harder for people to launder money, and easier for police to catch them.

This doesn’t just matter because you could lose money (among the people who launder are forgers, so look out for that!). It matters because if you run credit accounts and do not apply KYC principles, you could face the loss of your credit facility, fines and in extreme circumstances even prison.


So, In Summary…


In short, to avoid being the victim of fraud you will sometimes need to come across like the bad guy. You will, on occasion, need to tell someone you can’t accept their payment because the law demands it. You may even have to tell innocent people that you legally can’t sell something to them. You might feel like the bad guy, but it will prevent you being the real bad guy’s victim.

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