Watch out for these common business fraud scams

Powered by Nevada State Bank

It’s important for business owners to be savvy about the types of fraud that can affect their business’ bottom line. From washed checks to phishing scams, being prepared for the worst can mean keeping your business safe. “Fraud continues to get increasingly sophisticated, and businesses need to equip themselves with updated information to prevent it,” said Craig Kirkland, Executive Vice President and Director of Retail Banking at Nevada State Bank. There are many different methods that can help prevent or even correct fraudulent activity.

Wire fraud

There are several types of wire fraud prevalent in the business world. Business Email Compromise is a billion-dollar crime industry that tricks employees into wiring money to fraudsters. Emails often impersonate an executive who has permission to send wire transfers and they request that the recipient send funds immediately. Once a wire is sent, the money cannot be recovered.

As with other phishing scams, it’s important to verify where a request is coming from and train your employees to spot signs of a scam.

Another common type of wire fraud impersonates a company’s vendors or suppliers and requests that routine payments be sent to a different account — one that isn’t actually going to the vendor.

“In these circumstances, the vendor has likely been hacked and funds are going to the fraudster,” Kirkland said. “Further, with recent supply chain issues, many businesses are struggling to find the right vendor and might hire a new vendor for the price but aren’t getting what they ordered after making the payment.”

Phishing

Phishing attempts to extract sensitive information from its victim under the guise of a reputable company.

“These fraudsters will text, email or call you pretending to be someone else,” Kirkland said. “For instance, they can use an email address that appears to be coming from Nevada State Bank, but it’s not. Never click the links in an email or text from someone you don’t know, and never give personal information over the phone.”

It’s common for phishing schemes to use fear-based tactics to prey on people. Someone may call claiming to be from your bank or from a utility company and threaten to close your account or cut off your service unless you pay immediately. Banks, utility companies and other essential services will not call using scare tactics like this. If you’re ever unsure whether a call, text or email is legitimate, call the number on your statement directly.

Use a secure network. Don’t do your payroll at a coffee shop using their public Wi-Fi. Always use a secure network when doing anything finance related.

Check fraud

While modern technology has opened the door for new types of fraud, there are plenty of less sophisticated methods that are still common. “Washed checks are still happening a lot,” Kirkland said. “We see people duplicating checks or employees who alter the amount on their last check.” While there are several ways someone can modify or issue fraudulent checks, keeping your physical checks safe and working with your bank’s anti-fraud services can prevent check fraud. “All businesses should be using Positive Pay, which is a banking services that verifies the check issued, the number and amount,” Kirkland said.

Businesses should use online banking services with notification alerts to monitor business accounts daily and make sure all transactions are legitimate.

Employee fraud

Unfortunately, employee fraud is common for businesses of all sizes and can involve fraudulent activity using checks, ACH services and debit cards. Strict hiring practices and thorough training can help prevent employee fraud, but it’s also important to implement a checks-and-balance system to ensure oversight. “Don’t let one individual control everything. You won’t know if someone is taking money from the business if you’re not paying attention,” Kirkland said. “You need to put controls in place and establish dual controls for transaction processing.”

Set up multifactor authentication on everything that requires a password. This ensures that there won’t be a security breach if someone steals your password.

Other best practices to prevent fraud

1. Whenever possible, use direct deposit rather than physical checks for payroll.

2. Invest in I.T. support and up-to-date cybersecurity.

3. Use the resources you have available, including security options provided by your bank and free small business resources from the Federal Trade Commission.

What if you've fallen victim to fraud?

Contact your bank immediately. They can help advise you on options, next steps and more.