Although it is a week that I wish we did not need to recognize, next week is National Fraud Awareness Week. SunTrust Bank has partnered with the National Small Business Association (NSBA) to put out the “Foil Fraud” survey.
I followed up with the folks at SunTrust to get some more insight into the nature of fraud in small businesses.
Q: Is the problem of business fraud getting worse for small business owners?
A: It might be. Based on our survey we know that it certainly is a concern for small business owners and that concern is growing. A recent joint study by SunTrust and the National Small Business Association showed that 84 percent of small business owners are concerned about fraud in connection with their businesses’ finances. We also know going into the next year those same small business owners say they feel more vulnerable when it comes to fraud. In the Southeast 1 in 4 small businesses have been affected by fraud and nearly half of all business owners know of some small business that has been hurt by fraud. This fear is growing as businesses become more reliant on the Internet.
Q: What is the most common type of fraud small businesses face?
A: Interestingly, our survey showed that the majority of small business owners were concerned with online identity theft, or online hackers. However, in actuality the most common types of fraud perpetrated on small businesses are credit card fraud and check fraud; and the most common perpetrators of these types of fraud are clients and employees.
Q: What are some simple steps that small businesses can take to prevent fraud?
A: First and foremost, small business owners should talk to their financial institutions to find out what types of fraud protection they offer. Our survey showed that business owners wish banks offered businesses more help in fighting against fraud. A very large percentage of business owners wish there was a way to detect business fraud to prevent or limit loss and are looking for more information about preventing fraud in their business. At SunTrust, we have listened to this and acted, and now have a product to help small business owners detect fraud. Our Online Cash Manager Plus and Premium products now feature Fraud Inspector–a feature that was designed to help small businesses identify fraud and reduce risks before businesses are impacted. The tool gives clients the ability to review paid items that have cleared against their business checking, savings or money market account(s), and request that an item be returned if it is suspected to be fraudulent.
We also encourage small business owners to focus on things like the separation of duties within their office staff and enforce other measurements such as have a fraud policy in place with a fraud hotline or suggestion box. But most importantly business owners should hire the right employees. In doing so, they should conduct background checks on employees, especially those associates that will be dealing with valuable inventory or finances. Also, take the time to call references and verify credentials–too often employers skip this step, and it could mean the difference between a star employee and an employee who could hurt your business.
Finally, get involved. Becoming a member of a national association, like the NSBA, can really help small businesses stay connected to these kinds of key issues.
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