As a lending enterprise, it is urgent that you know all you can about financial fraud and which types are perpetrated most often. To help narrow the field down, MoneyThumb offers enterprises and lenders the following list of the four most common types of financial fraud to watch for:
The forms that fraud may take seem to be limited only by the imagination of the person committing the fraud, but the common types of fraud are:
- Check fraud — Dodgy checks bounce because there are insufficient funds to honor them, or are simply fakes. In either case, the away to avoid this type of fraud is to insist on bank checks or avoid checks altogether. The latter is quite easy in the age of electronic payments. If customers insist on payment by check, wait for it to to clear before providing goods or services.
- Banking/identity fraud — This involves someone acquiring your banking details and then using them to steal from your account(s). Most electronic business banking systems offer multiple security steps for transactions — including security tokens, cross-authorization etc. — so be sure to take advantage of these security measures.
You should also be very conscious of keeping your staff details up to date, lest a departing employee access your accounts and steal money.
- Direct theft — Employees may ‘lift’ stock or pocket payments by failing to process the sale or deleting invoices. Keeping this type of fraud in check requires vigilance; make sure everyone working in the business knows that stock and payments are checked regularly.
- Invoices and payments fraud — These types of fraud rely on your business having less-than-perfect accounting practices that see automatic payments made for incoming invoices for something you haven’t ordered or received. Or payments are made to non-existent employees, or excess amounts paid to actual employees. To avoid this type of fraud, make sure any invoices you receive are checked against the goods or services ordered and that more than one person is involved in the processing of payments.
Unfortunately, fraud is a natural outgrowth of our digital age. But keeping up to date on the latest news, developments, and technology to help you fight fraud as a lender can let your mind rest easier. Follow our Rules of Thumb blog as we continue to keep you informed about this scourge on the financial industry, and the internet in general.