Protecting Yourself (and Your Business) from Fraud

Think you're safe from fraud? Think again.

According to the Federal Trade Commission (FTC), 2.8 million cases of fraud were reported by consumers in 2021, totaling more than $5.8 billion. This is a 70% increase from 2020. In addition, small businesses have the highest fraud rate - more than individuals or large companies.

So, how can you protect yourself and your business from falling victim to a scam or identity/information thief?

6 easy ways to protect yourself from fraud:

1) Keep your cards and bank accounts safe.

// Separate business from personal. //
Having separate bank accounts and credit cards for your business and personal accounts reduces the risk of fraudsters getting their hands on your money. Bonus: it'll also be easier to track your business expenses and accurately report deductions on your tax returns.

// Evaluate risk before using credit cards. //
Make sure you use your cards wisely and have very limited employee access. If you're hesitant about using them on a certain website, listen to your gut. If employees have company cards, make sure you monitor them very closely.

// Pay attention to statements and online banking. //
Ensure you are checking your accounts daily for any suspicious activity. If something looks "off", report it immediately and cancel that card.

2) Keep tabs on your credit.
Be observant! To avoid falling victim to identity theft, it's important to regularly examine your credit report.

// Get a free credit report. //
Once a year, you can get a copy of your credit report (for free!) from all three credit reporting bureaus. You can find them here.

// Use a credit monitoring service. //
These companies watch your credit reports (typically for a fee) and will alert you to changes to the accounts listed on your report...helping to identify any fraudulent activity!

3) Utilize credit freezes and fraud alerts (if needed).
If you've had any prior misuse of your personal information (i.e. identity theft), you can place a credit freeze and/or fraud alert on your personal credit report. When a freeze or fraud alert is in place, lenders will know to verify your identity before the process new applications for credit. As long as you otherwise qualify, a fraud alert legally cannot prevent you from getting a loan or opening a new line of credit. (Although it may slow down the approval process.)

A temporary fraud alert expires after one year. An extended fraud victim alert remains on your report for 7 years unless you remove it earlier. Alerts are free, and you may renew them as many times as you like!

4) Limit access to key data and have internal controls.
All financial information (both physical and electronic) needs to be stored with limited access. This could mean:

• Placing company credit cards in a locked drawer.
• Using dual authorization methods for bank transfers.
• Setting up user restrictions to limit access to only certain individuals.
• Ensuring each employee has a unique user ID and password to sign into their computer.
• Implement an automatic sign-out when the computer is not being used.

These steps help ensure that sensitive company, employee, and customer information doesn't enter the wrong hands.

5) Secure your IT infrastructure.
// Software //
Every business owner should invest in a firewall as well as anti-virus, malware, and spyware detection software. Having a back-up of your data is also a must - and will make it a lot easier to continue business operations in the event of a cyber-attack.

// Education //
Proper security training for yourself and your staff is key to keeping your business safe. Employees are both our first line of security as well as our greatest point of vulnerability. Holding regular training sessions on security threats and prevention measures are crucial as cyber-attack methods evolve rapidly.

// Passwords //
A password policy should be put in place for all team members. Ensure each employee:

• Regularly changes their passwords (every 60-90 days).
• Creates complex passwords (i.e. one upper-case, one number, and a minimum of 8 characters). Passphrases are even better!
• Uses different passwords for each online and system account.
  
  

6) Safeguard yourself with insurance.
Even if you heed the advice given above, you still could be hit by fraud or cybercrime. Purchasing an insurance policy that protects you against any losses you may incur from crime or fraud is a good idea. You should also research what type of fraud protection your bank and credit cards have built in.

Every business and individual is susceptible to fraud.

Fraudsters are quick to adapt and their tactics rapidly evolve. You don't need to be frightened of fraud, but stay mindful of threats. It's important to keep yourself educated and take any steps you can to reduce the risk to yourself AND your business. Stay vigilant!