Small businesses are often vulnerable to fraud, especially when they fail to maintain adequate financial and cash controls or properly supervise employees who run their financial operation. In the high tech, fast paced world of today, scams targeting small firms have more than doubled over the last twelve years, according to the Better Business Bureau. Further, U.S. Employers lose more than $400 billion annually to misuse of assets, corruption, false statements, false overtime, petty theft and pilferage, use of company property for personal benefit, payroll abuses and other fraud. Common business fraud includes employee dishonesty, embezzlement, shoplifting, check and credit card fraud, vendor scams and Internet fraud.

Bank of Oklahoma has developed a quick list of ways to help better protect your business from fraudulent activity. Every step further minimizes the likelihood of you or your business becoming another statistic.

• Identify weaknesses in your business operations. Examine areas such as hiring practices, record keeping and auditing procedures to eliminate any tempting loopholes.
• Do you set a good example? Employees often follow their superior's example. Everyone, including key organizational leaders, should strictly follow internal control policies.
• An adequate accounting system with internal controls is the best method of preventing and detecting fraud. Controls and procedures must be audited periodically to prevent breakdowns in the system.
• Weak hiring practices put many businesses at risk. Do you check references? Do you conduct thorough background checks on all new employees?

• Criminals may make purchases with stolen credit cards; or they may intercept pre-approved credit offers sent to consumers and obtain cards fraudulently by filing change-of-address orders. Unlike consumers, who are liable only for a maximum of $50 in most cases, businesses often bear 100% of the losses due to these crimes.
• Technology has made it easier for criminals to create counterfeit checks, as well as false identification, that can be used to defraud businesses and banks.
• Con artists may call or visit your business and attempt to sell poor-quality, overpriced supplies that may never be delivered. Don't buy from new suppliers without verifying their existence and reliability.
• Beware of phony directory solicitation, invoices and listings. The Better Business Bureau reports that as much as $50 million each year is lost to con artists who use the familiar, but never trademarked, "Walking Fingers" Yellow Pages logo to sell ads.
• Con artists may bill a small business for web-site design services or features that the business never ordered.

• If you behave ethically, most employees will follow your example.
• Make sure that different employees place and approve purchases.
• Have disbursements properly approved. Implement good check security practices, such as two signatures on all checks.
• Review complaints from customers, suppliers and staff members.
• Develop a documented system of internal fraud control procedures and ensure that external audits are performed regularly.
• Have bank statements mailed to a post office box or other secured place rather than to your office. Review cancelled checks, deposit activity, paying special attention to large or unusual transactions.
• Ask your BOk representative about fraud protection products and services such as Positive Pay and Stop Payment.
• Conduct thorough background checks on new employees.
• Segregate accounting responsibilities so that no single employee controls all facets of a financial function.
• Limit access to valuable physical assets including inventory, especially readily marketable items. Lock up your check stock paper.
• Insist that all employees take allotted vacation time. Many white-collar criminals avoid leaving work for extended periods of time in order to prevent discovery of their criminal activities.
• Before disposing of your computer, remove data by using a strong "wipe" utility program. Do not rely on the "delete" function to remove files containing sensitive information.
• ASK QUESTIONS. If something seems wrong or out of place, investigate. Often there is a reasonable explanation; if not, keep asking questions until you discover the root of the problem.

For further questions or to report a case of fraud, contact the following agencies: