Types of Fraud You Should Protect Your Business From

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Fraud is one of the biggest ways a business can go tumbling down. It’s crucial to stay protected from its many variations that can halt operations. Among these variations, some of the most commonly seen are return, payroll, and cash fraud. To keep your business running successfully, make sure you know about what entails these and how to handle them accordingly.

  • Return Fraud

Customer returns saw over 300 million USD in costs in 2019, with a staggering number of these being fraudulent. Reports showed that return fraud increased in the past year alone, up 35% from the previous. That, in itself, sees many variations, so it’s essential to be prepared for these transactions, especially if the business runs an online platform and deals with those types of returns.

Making use of a reverse logistics provider can be helpful in circumstances where you have to verify the nature of the return. Is the claim valid for a return and refund? Can you confirm if it is the correct customer or if there is some other shady trick going on? A lot of fraudsters make use of other people’s purchases to get money from establishments. They also turn in broken items while keeping the actual one the store sold them so that they can get a pay-out.

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  • Payroll Fraud

Some of the most troubling cases happen from within your business itself, with employees who end up committing malicious acts against their employer right under their nose. After all, workplace theft and fraud have seen an increase throughout the years. Now, the majority of businesses can expect that their workers are stealing from them in one form or another.

Among the more problematic manifestations of this is through payroll fraud, where false claims are made to get more money. It can be padding their time with fake overtime, creating ghost employees, or increasing hourly pay bypassing official means. That can filter a lot of hard-earned cash from your business in a way that can slip past you if you’re not mindful of your accounting and employee management.

  • Cash Fraud

This type is one of the hardest to trace once it has been done, so it’s crucial to prevent it. Employees can do this by pocketing cash from the many points of payment your business may have. On the consumer end, they could steal from your cash register and even make use of fake bills. The best way to combat this is to make sure you have good security and can detect falsified money bills from the get-go. In terms of protecting yourself from employee theft, make sure you have a sound system of monitoring your cash-in and cash-out and be more stringent on background checks before hiring.

Financial crimes are still prominent throughout different industries, and small businesses, in particular, can be the most vulnerable to them. Not only are they susceptible to these attempts, but they can’t also make use of the resources that can be available to them with more awareness. Plus, the aftermath of this is worse on small businesses and can be challenging to bounce back from. That’s why the most crucial course of action is the preventative kind.

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