According to the Association of Certified Fraud Examiners (ACFE), the typical organization loses 5% of revenues to fraud each year, and small businesses are impacted disproportionately1. Thankfully, there are a few tricks small business owners can use to combat potential fraud. To start, look at the main entry points of exploitation: cyberattacks, identity theft and occupational fraud.
You may be familiar with big-name retailers suffering data breaches, but did you know hackers actually favor attacking small businesses? Symantec reports that 60% of all targeted attacks struck small and medium-size organizations2.
How can you prevent cyberattacks?
- Lock down devices. Secure sensitive information by restricting physical access to electronics, using unique and complex passwords and keeping software current.
- Enable multi-factor authentication for all online accounts. This requires users to verify their identities in at least two separate ways, making it harder for hackers to weasel their way in.
- Encrypt sensitive customer and business data. This prevents anyone from intercepting plain-text messages, including payment card information.
Identity theft and identity fraud do not just target individuals — businesses can be impacted as well, especially small businesses. Identity fraud occurs when someone exploits existing financial accounts. Identity theft occurs when new lines of credit are opened in the business or business owner’s name. If you are impacted by either of these crimes, your business information may be compromised as well.
How can you prevent identity theft?
- Review your personal and business bank records frequently. If unfamiliar transactions are detected, report this to your financial institution immediately.
- Don’t ignore pre-approved credit card offers. Respond to all credit card offers appropriately, and immediately inquire about any unfamiliar credit approvals or denials received.
- Review your credit report. All consumers are entitled to receive a free credit report from all three of the major credit reporting bureaus annually. Review this report for inaccuracies that may signal identity theft.
While most employees are honest, the occasional bad seed will secretly siphons funds from a small business. Everything from falsifying expense reports to stealing petty cash from the register falls under the occupational fraud umbrella.
How can you prevent occupational fraud?
- Conduct background checks. Reviewing employment and criminal history and verifying all references can ensure you only hire those who are a good fit for your business.
- Implement a checks and balances system. Foil the opportunity to commit fraud by having multiple individuals oversee finances. For example, have at least two employees review expense reports, or have both the manager and cashier count the cash register at close.
- Enact an anonymous tip hotline. The ACFE found that anonymous tips are the most effective way to detect occupational fraud3, so make sure employees have an anonymous outlet to voice business concerns.
By taking proactive measures to mitigate the damage from these three common fraud avenues, you and your small business can focus on what matters most — satisfying your customers and growing your business.
Click here to learn more about how Aflac Fraud Protection, Powered by EZShield, can help you protect your business and employees.
 Association of Certified Fraud Examiners 2014 Report to the Nations on Occupational Fraud and Abuse.
2 Symantec 2015 Internet Security Threat Report.
3 Association of Certified Fraud Examiners 2014 Report to the Nations on Occupational Fraud and Abuse.
Bank of America, N.A. engages with American Life Insurance Company of Columbus (“Aflac”) to provide informational materials for your discussion or review purposes only. Aflac Inc. is a registered trademark, used pursuant to license. The third parties within articles are used under license from Aflac. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.