HOW BUSINESSES CAN AVOID BECOMING THE VICTIMS OF FRAUD
Released On 10th Dec 2021
UK businesses have had plenty to cope with over the last 20 months or so. Hammered by COVID-19, hit by a skills shortage and coping with sometimes patchy supply chains.
So, it’s even more important that they have robust measures in place to tackle fraud.
Fraud is simply the intent or the act of misrepresentation – scammers lying about themselves or their actions and services – to cause a gain or loss.
Due diligence, internet controls and risk management can often be overlooked and seem expensive or hard work.
However, according to the Metropolitan Police, this perception often leaves SMEs particularly vulnerable to fraud. With many owners and managers unaware of the risks their businesses face.
Fraud can come from anywhere, including:
- Staff members
- Customers
- Suppliers
- Third parties, unconnected to the business.
To assist businesses, here are some tips to prevent business fraud:
Be sceptical
If it sounds too good to be true, it probably is. Thoroughly question all deals, opportunities, documents, transactions and information.
Have a thorough understanding of your business, including:
- How it operates
- The staff you employ
- The products and services it provides
- Your target market and your business
- Your legal and regulatory obligations.
Know your customers and suppliers
When you understand who you do business with, you can spot any business requests or transactions that look fraudulent.
Conduct due diligence, such as checking the customer or supplier details you have on file, as well as online searches.
Also be careful if any suppliers or customers claim to have changed bank details – always double check by speaking to your usual contact where possible.
Identify your vulnerabilities
Imagine how a fraudster might target your business and test the systems you already use to reduce risk. Make sure you and your staff know those systems and regularly review them.
Train your team
Fraudsters will try to target your team, often trying to obtain information via email, phone calls or even in person.
You should train them to spot the signs of fraud and teach them to be cautious of unexpected emails or calls, especially those that purport to be from banks or public agencies, such as HMRC.
Develop a strategy and talk about fraud
Create a fraud prevention and detection strategy for your business. It should detail controls and procedures. Talk about fraud with your staff, suppliers and other contacts.
Take extra care against cyber attacks
With increasing threats from cybercrime, protect your business technology against attacks.
Make sure you back up your systems in case they go wrong or are attacked.
Invest in programmes and services that help to deter or prevent fraudsters from committing fraud.
Fraudsters sometimes use email addresses that look very similar to legitimate company email addresses – but check carefully if something seems suspicious, as sometimes the spelling in the address will be ever so slightly different.
Understand how money leaves your business, including:
- Methods of payment
- Who has the authority to make those payments?
- Who checks payments are legitimate?
Secure and protect your property
This includes laptops, computers, smartphones and intellectual property.
Factor in business insurance to cover these items if they’re compromised or stolen.
Develop an action plan
Consider when you might need professional or legal advice.
While prevention is better than cure, you and your business need to prepare for the worst. Having an action plan in place will help limit your losses to fraud.
Always report fraud and get help
Action Fraud is the UK’s national fraud and cybercrime reporting centre or you can also report fraud to the police.
If you receive suspicious communications from HMRC or other public agencies make sure you report them as well. HMRC has a dedicated fraud service found here.
How we can help
We are committed to preventing businesses and individuals becoming the victims of fraud and are taking an active role in protecting local communities.
Our Forensic Director, Helen Gregory, is part of the steering group that has re-launched The South West Fraud Forum (SWFF) – an organisation dedicated to helping prevent businesses and individuals from becoming victims of fraud.
The group held its inaugural meeting on 2 December with the following keynote speakers:
Mark Shelford, Police and Crime Commissioner for Avon & Somerset and the national lead for Economic and Cyber Crime
Malindi Myers, Bank of England Agent for the South West
Paul Carroll, Fraud Investigations and Intelligence Manager at TSB Bank
The SWFF will be holding regular events to increase the resilience of regional organisations, in both the private and public sectors, against fraud.
If you are concerned about fraud, you should take action immediately. Our team has advised many businesses on financial fraud prevention, helping businesses create robust internal control and systems – contact Milsted Langdon today.
