Business fraud is becoming an increasingly prominent threat, and all business owners should remain alert about the many possible types of fraud they could be victims to. Small businesses are particularly vulnerable because they typically lack the manpower to devote to internal controls and asset monitoring. Though the creativity used by some fraudsters makes categorizing business fraud near impossible, here is a brief list:
- Hacking. Hacking involves attempting to access company information by breaking through security mechanisms like passwords and authorizations. Once a hacker has breached a business’s security system, they could potentially have access to all business assets without authorized users being aware. Hackers can also access government files in the case of South Carolina or customer files in the case of Target and get personal, business, and payment information that they can then use to commit fraud. Although hackers stealing customer information might not compromise the business itself directly, it can severely affect the company’s reputation and credibility, as the company appears less secure or stable than before the hack.
- Internal Fraud. When current or former employees take advantage of or misuse their privileges, they are committing internal fraud. This San Antonio woman’s theft went unnoticed for almost 6 years, totaling upwards of $1 million. Embezzlement is a commonly reported type of internal fraud, but it is not the only one. Businesses have been robbed of critical data, assets and cash by employees using unapproved hardware to steal.
- Malware. As the Internet gets more and more advanced, so does Malware, which is malicious software that can be used to manipulate or disable company assets. Fraudsters can use Malware for profit in a number of ways. One example would be encrypting all company files and threatening to delete them unless the company pays a sum.
- Social Fraud. Social fraud takes advantage of trust. Phishing is the most popular means of committing social fraud and usually involves a falsified website or email to take advantage of a person or company. Other types of social fraud include bribery, extortion and conning.
- Physical Fraud. Physical fraud is more than just armed robbery or physical theft. This could involve elaborate schemes like credit card skimming or using a company’s federal taxpayer identification number to file forged W-2 forms.
With fraudsters constantly adopting technologically advanced and unique approaches to theft, the best equipment small business owners can arm themselves with is vigilance. Though it is difficult to anticipate how a thief will attack your business, it is important to take measures to safeguard your company by regularly changing passwords and educating your employees about security threats. In addition, you can stay alerted to changes in your business credit profile with CreditSignal®.
Photo Credit: MattysFlicks, Flickr
