By Robert Pinard

 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 fraud for your business. The 2019 Association for Financial Professionals Fraud and Control survey found that “a record 82 percent of organizations reported incidents in 2018.” Other key findings that should raise the alarm around fraud:

  • 80% of companies reported business email compromise fraud last year, up from 64 percent since 2015. More than half of these organizations reported financial losses as a result.
  • A vast majority (70%) of these scams targeted checks, followed by 43% targeting wires
  • 64% of attempted or actual instances of payments fraud resulted from actions of someone outside of a business or organization
  • One in four organizations indicated they have not received any advice from their banks

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.

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 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 check 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 antithetical to have so many hands involved, but doing so means no one person has unfettered access to business accounts. 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.

Another important tip is to ensure there is adequate coverage for vacation or days off around the holidays. Providing access to individuals that 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.

Robert Pinard, Vice President, Treasury Management Rockland Trust