In 2020, records revealed over 2.1 million fraud reports representing over $3.3 billion in losses. These numbers call for efforts to protect and educate consumers and businesses.
Have you ever been a victim of fraud or are you looking for ways to prevent fraud from even happening in your business? Either way, you've come to the right place. This fraud prevention guide will protect your business against a common type of fraud.
Payroll Fraud
Payroll fraud occurs when someone falsifies documents or manipulates the payroll system. This forces the company to pay the wrong amount of money. Here are the most common types of payroll fraud:
To prevent this from happening, perform background checks on all potential hires. Managers need to keep tabs on timesheets and invest in automated payroll providers.
Return Fraud
Many retailers have a return, refund or exchange policy for defective products. These steps are how it should work, at least. But some people take advantage of it.
Return fraud includes:
Prevent return fraud by strengthening payment dispute response and exchange policies. For example, all refunds and exchanges must be accompanied by receipts. Additionally, you can issue store credit instead of cash when issuing refunds.
Currency Fraud
Currency fraud occurs when a customer uses counterfeit currency to complete transactions. It is difficult to decipher real money from fake with the now advanced methods used by fraudsters.
Education is key to preventing fraud. Teach staff who handle cash how to spot counterfeit notes. If you take huge sums, invest in a counterfeit money detector.
Bribery and Corruption
Bribery and corruption are very present even in small businesses when they go unchecked. It covers a wide range of activities, including:
Your measure of fraud protection with this type includes implementing more stringent compliance programs. Ensure that all employees, managers, and third-party vendors perform due diligence.
Data and identity theft
Many companies process sensitive data, whether personal information or intellectual property. Leaking trade secrets and patents can be disastrous for your business. Data and identity theft can damage customer trust.
To avoid this type of commercial fraud, limit access to high-level documents. Implement a security policy to classify and process sensitive data.
Protect your business against all types of fraud
As they say, prevention is better than cure. A well-structured and organized fraud risk management policy avoids devastating losses. Comprehensive fraud checks require understanding the type of fraud as noted above.
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