Protect Your Business Against Fraud This Holiday Season

It’s the most wonderful time of the year — especially for those looking to defraud your business. While it’s important to stay vigilant year-round, business owners should pay special attention to fraud during the busy holiday season.

Facts About Fraud and Why Businesses are Susceptible

First, it’s important to recognize the very real risk of business fraud. The 2023 Association for Financial Professionals Fraud and Control survey found that “65 percent of organizations were victims of payments fraud attacks/attempts in 2022.” Other key findings that should raise the alarm around fraud:

• 71% of companies reported that their organizations had been targeted by business email compromise attempts in 2022.
• Checks and wire transfers continued to be the payment methods most impacted by fraud activity (63% and 45%, respectively).
• 80% of organizations seek assistance from their banking partners for guidance to minimize the impact of the fraud.

In general, businesses are at a high risk of fraud due to a variety of factors, including large amounts of operating cash, multiple online users, and regular patterns of electronic and check payments. These payments can be targeted by account takeover or business email compromise scams.

The best way to protect your business is a twofold process:

1. Understand the latest fraud schemes

2. Implement cybersecurity strategies to prevent fraud attacks

 Why Might Fraud Increase During the Holiday Season?

For many, the holidays are a time to relax and unwind. But letting your guard down can unfortunately put your business at risk.

Retail businesses especially must take special precautions around the holidays, as increased transaction volumes can make it harder to spot suspicious activity. Similarly, if your company gives bonuses, the volume and dollar amounts of these types of transactions could obscure a fraudulent payment unless someone is carefully checking accounts regularly.

This time of year, many companies conduct benefit enrollment, end-of-year pay raises, or other changes that require communication to employees. Phishing emails that mimic these communications can result in someone gaining access to company data, passwords or other sensitive information.

What Are Common Fraud Mistakes and How Can I Avoid Them?

With all of this in mind, how can a business protect itself? We asked Robert Pinard and Karen Niro of our Treasury Management team about why businesses are targeted and what every business owner needs to know to keep their holidays happy.

One important step is to understand how to secure your account with fraud prevention services and techniques that mitigate your risk. An example of an anti-fraud tool is Positive Pay, which helps detect check fraud and protects business accounts from unauthorized checks and incoming automated clearing house (ACH) transactions.

Basic fraud prevention techniques include checks and balances at all points, including processes like dual controls and the segregation of duties across your business. It may seem backward to have so many hands involved to reduce risk, but doing so means no one person has unfettered access to business accounts without some oversight from others. While employees can feel like family, it’s also wise to never assume that a long-tenured staff person would never commit internal fraud.

This time of year is a good time to conduct “refresher” training on company policies and procedures regarding security. Instilling in employees the value of security protocols and what they entail can help avoid disaster. This is especially important if you hire temporary staff, who may not be as up-to-date on current security procedures.

Read the highlights from our recent webinar:

Navigating the Digital Minefield of Business Fraud

 Another important tip is to ensure there is adequate coverage for vacation or days off around the holidays. Providing access to individuals who may be covering but do not know how to enact controls or other processes in place can set a business up for potential mistakes, such as not verifying correct account details or proper check cashing procedures.

Throughout the year, Rockland Trust helps businesses like yours navigate the proper processes for mitigating exposure to fraud. Our Treasury Management team is happy to conduct trainings and talk to your financial team about payments fraud, as well as help employees keep personal accounts safe.

Make a Fraud Prevention Checklist and Check it Twice!
Download the 2023 Checklist