by Geralyn Hopson

Created on: March 21, 2010

The ability to protect your business from fraud is actually non existent.  You cannot protect youR business from fraud.  You CAN take steps to reduce your risk of fraud by following four simple rules.

1.) KNOW YOUR CUSTOMER - If you don't take steps to identify the person or persons with whom you are doing business you are guaranteed to  be scammed by someone;

2) SAFEGUARD YOUR CHECKSTOCK -Check fraud is one of the most common frauds around. In 1988 Forbes published an article titled "This Check is a Fake"  Since the advent of that article check fraud has exploded around the world.  The article didn't start it but inadvertently it seems to have contributed to the rise since it pretty much served as a primer.  Today checks are counterfeited, forged, stolen, deposited as good when they are drawn on closed accounts.  You can reduce your risk of fraudulent use of your check stock by simply locking it up.  When you order checkstock for your business ask that it have at least two security features.  These features will not stop a counterfeiter but they will make it easier to detect.  Check stock with no security features is the easiest to copy and forge;

3) SAFEGUARD YOUR PASSWORDS AND USERNAMES - Trusted employees with hidden financial needs are amongst the biggest threats to your business.  When an employee is allowed access to usernames and passwords to all your financial records you are courting trouble.  There may be job responsibilities that require an employee to have this access, but there should always be a check and balance.  If that employee is allowed to write online checks for the business, then another employee should reconcile the bank account on a daily basis.  Funds can sometimes be recovered if the movement is caught in time, and you will certainly limit your losses and ;

4) RECONCILE YOUR BANK STATEMENT - Most banks require that you reconcile your bank statement on receipt.  When you don't and there is a fraud against your account, they will use against you that you didn't notice the fraud against your account in time and will limit the amount you are repaid to the time limit given in your account agreement.  For example if you are given 30 days to report but the fraud went on for six months you will only be repaid whatever losses occurred in the  30 days the account agreement gave you to reconcile and notify the bank.  If you don't catch the fraud at all until months later you will lose all the funds that were fraudulently drained from your account. 

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