Isn’t that what you learned as a child? You know, “There’s no such thing as a free lunch,” and stuff like that.
Those adages continue to be true today and are good advice for business owners. All of us need to be alert to signs of financial shenanigans in our businesses (and in our personal accounts, as well!).
What are the warning signs of fraud?
Unexpected charges on your business accounts. This could be a purchase that wasn’t authorized on your American Express or a bill for services or goods that were never received from a vendor.
- Accounts on your credit report that you don’t recognize or inaccurate information. You may review your credit report and see that an account was opened without your knowledge. Perhaps it’s a charge card or a fleet card for a gas station.
- You get credit cards without applying for them. Along the same lines, your business may be approved for a new credit card with a generous credit limit. But you never completed an application.
- An unreasonable denial of credit. Also related is the situation where your business is turned down for credit when you did actually apply for a credit card or loan. Or conversely, a notification that you’ve been denied credit for which you didn’t apply.
- Your checks are significantly out of order on your bank statement. When you review your business’ bank statement, you see significant gaps and checks cashed out of sequence.
- Your invoices or statements unexpectedly stop coming by US mail, which could signal an identity thief has assumed your account and changed your billing address.
- Your financial institutions unexpectedly freeze your business accounts.
- Debt collectors start to harass you about goods and services your business didn't purchase.
- You receive notifications about your address, passwords, or other critical information being changed without your knowledge or permission.
How do you prevent fraud from happening?
- Subscribe to a credit monitoring service that alerts you to these types of issues.
- Monitor your own accounts on a frequent basis in order to catch fraud in its infancy.
- Have comprehensive company policies about financial controls.
What do you do if fraud happens?
- Contact your banks and credit card issuers immediately and report the fraud.
- Contact the credit agencies to report the fraud.
- Change passwords on all accounts (and make them strong and different!).
- Contact us to help initiate a workplace investigation if you believe an internal resource was responsible.
For More Information
Check out our library resources including the related articles, “Digital Damage Control - Data Breaches and NY Small Businesses” and “Shining A Light On The Importance Of Corporate Recordkeeping For Every New York Small Businesses.”
Remember, LOVE LAW FIRM always stands ready to help you when you need us most. Don’t hesitate to reach out.
Francine E. Love is the Founder & Managing Attorney at LOVE LAW FIRM, PLLC which dedicates its practice to serving entrepreneurs, start-ups and small businesses. The opinions expressed are those of the author. This article is for general information purposes and is not intended to be and should not be taken as legal advice.