No business is immune to fraud, and small businesses are especially at risk. Small businesses experience fraud at a 42% higher frequency than large corporations. Fraudulent activity can have lasting financial consequences for business owners. There are steps small businesses can take to prevent business fraud.

1. Safeguard computers and technology.

Employees utilize a lot of technology to get the job done. Smartphones, computers, tablets, and laptops are some examples. A workforce that relies on technology is susceptible to certain types of risk. These technologies are susceptible to ransomware, phishing attacks, business email compromise, and data breaches. The technology that helps us grow can also help fraudsters cause our small businesses harm.

The following steps can help secure employee devices and prevent business fraud:

Keep computers updated.

Keep computers updated with the latest software and next-generation antivirus programs. Next-generation antivirus programs can help detect malicious behavior, not just infected files.

Clearly outline policies.

Outline clear acceptable use policies that inform users what can and cannot be done with company assets. Limiting behavior limits risk.

Train your employees.

Train employees on different types of business fraud and how to avoid common threats. Training is one of the most important steps. Employees are the best defense against fraud. For example, if you teach employees how to spot phishing emails, they are less likely to click on links that could result in a data breach.

Back up data regularly.

Back up data on a nightly basis and store it in multiple locations. Being able to recover after a cybercrime or data-related fraud is critical. Backups protect work in progress and give record protection.

Use strong passphrases.

Assign strong passphrases that can’t be easily guessed. Many businesses have stopped using the term passwords and have started teaching employees to use passphrases. Passphrases are a sentence or phrase that is long but easy to remember. Passphrases may contain spaces which count as a special character just like an exclamation mark or asterisk.

Require VPN (virtual private network) for offsite employees.

Require remote employees to use VPN when working remotely. VPN connections keep data private by encrypting data transferred from your office to the remote employee. This is especially important when using home Wi-Fi networks or public Wi-Fi. In general, do not conduct business on public Wi-Fi. Public Wi-Fi is insecure, and fraudsters may be lurking on public Wi-Fi networks looking for opportunities to intercept data.

Use multi-factor authentication.

Enable multi-factor authentication. Multi-factor authentication systems send a code to your cell phone to make sure your accounts are safe. If your username and passphrase are compromised, a fraudster may be stopped by the secret code sent to your cell phone or mobile device.

2. Verify payments.

Electronic payment, ACH, and wires are common targets for fraud. Monitoring and early detection of suspicious activity are key to preventing payment-related fraud. You can use services like Popular Bank’s Positive Pay fraud detection tools. These tools can help you:

• Monitor ACH transactions for fraud.
• Review checks before they are sent.
• Match payee names on issued checks to your database.
• Monitor your business finances through easy-to-use mobile apps.

3. Perform background checks.

When hiring for new employees or contractors, it is important to perform reference checks. You can also expand your recruitment process to include background screening. Consider using a service that specializes in pre-employment screening. The right partner can simplify the process and provide confidence in hiring decisions.  Having confidence in your hiring decisions is a great way to help mitigate fraud.

4. Have clear policies and training.

Employees should understand the consequences of business, payment, and other electronic types of fraud. Without clear fraud prevention practices in place, employees may not understand the damage their actions could do. It is important to develop policies and train your employees. Policies should explain what is considered fraud. These policies should outline the process your business follows in the case of suspected fraud or theft. Disciplinary actions to deter employees from committing fraud can be included.

Want to safeguard your business against fraudulent activity and gain peace of mind? Learn more about Popular Bank’s fraud prevention services.