Types Of Business Fraud And How To Prevent Them

​No one wants to get betrayed or scammed. Fraud is a big crime that can destroy a company. A business fraud happens when an individual or a business commits illegal actions. Such fraud can be hidden in some legal business operations.

Types of Business Fraud

To avoid getting involved in fraud, you need to know first the types of business fraud:

1. Identity Theft
   This is when someone steals your identity. Someone gains access to your credit like having your tax ID or financial statements.
   
   
2. Payroll Fraud
   This occurs when employees ask for a paycheck advance and don't pay it back. Situations such as people lying about their working hours are an example of payroll fraud.
   
   
3. Fake Money
   To avoid this certain type of fraud, you should know how to determine real money from fake.
   
   
4. Returns
   This happens when customers return the item they bought from you even though no defect can be found.
   
   
5. Employees' Compensation
   This occurs when you pay for an employee's injury. Even though the incident is not related to your business.

How to Prevent Such Frauds?
Here are a few suggestions for small business owners to avoid being a victim of fraud:

1. Conducting Background Check
   Not checking the background of the employees increases the chance of hackers inside of your company. Check to see their history on their criminal record.
   
   
2. Running A Credit Report
   Look for any fiscal responsibilities in the new employees' credit reports. See if they are involved in working in any financial role. You wouldn't want your financial officer to file for bankruptcy.
   
   
3. Doing Social Media Auditing
   You might need to consider checking their social media to look for anything that may destroy the company's reputation. This includes bad comments about a former employer.
   
   
4. Implementing Policies For Your Protection
   Implement an employee policy. This outlines their expected behavior whenever they represent your company.

Conclusion
Business fraud impacts businesses, whether it is small or big. Always be careful when hiring workers and making transactions with others. To help you cover expenses when a crisis comes, get insurance to be your safeguard. 

At Family Auto Insurance Agency, we do our best to ensure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (313) 285-9042 or Click Here to request a free quote.