Holiday Fraud Risks Every Business Should Know

Learn how to protect your business from fraud this holiday season with these tips.

The holiday season is often one of the busiest times of the year for businesses. Between increased customer demand, year-end responsibilities and planning for the months ahead, it's easy for security to become less of a priority. Unfortunately, fraudsters know this, counting on businesses to overlook warning signs while juggling multiple responsibilities. Understanding the most common scams can help your business stay one step ahead.

Common Holiday Scams

  1. Unexpected Packages: Receiving an unexpected package may not seem unusual during the holiday shopping season, but it could be a scam. Criminals will send merchandise your business never ordered, then demand immediate payment. They’ll create a sense of urgency to pressure you into paying before verifying whether the shipment is legitimate. If you receive an unfamiliar delivery, confirm that you actually placed the order before paying.
  2. Email Fraud: In Business Email Compromise, scammers may send emails pretending to be someone you know. These emails may urge you to send them important information, or try to convince you to click a link. Always cross-reference email addresses, and don’t click any suspicious links.
  3. Fake Vendor Invoices: Scammers create invoices that appear to come from legitimate suppliers, hoping they'll be processed without review. When you are handling a high volume of payments, it's important to verify invoices against purchase orders and confirm any unexpected payment requests with the vendor directly.
  4. Check Fraud: Paper checks are a target for scammers. Stolen checks can provide account and routing numbers that scammers use to create counterfeit checks or initiate fraudulent transactions. Mail theft often increases during the holiday season. Whenever possible, use secure payment methods and monitor your accounts for unauthorized check activity.  
  5. Employee Fraud: Not every fraud threat comes from outside the organization. Employees with access to financial records, payment systems or vendor accounts may misuse that access for personal gain. During busy periods, fraudulent activity can go unnoticed. Maintaining strong internal procedures and reviewing financial activity regularly can help reduce the risk of internal fraud.  

Ways to Prevent Fraud

  1. Review Your Accounts Regularly: Check your business accounts daily and sign up for account alerts to receive notifications about account activity. The sooner suspicious transactions are caught, the better.
  2. Strengthen Internal Controls: Limit employee access to sensitive financial information if possible. Encourage direct deposit for payroll, separate financial duties among multiple employees and regularly review accounting processes to help reduce opportunities for fraud.
  3. Verify Before You Act: The holiday season can be hectic, but taking a few extra moments to confirm invoices, vendor requests, deliveries and emails can help prevent fraud. If something seems unusual, contact the company or individual using a trusted phone number or email address before responding.   

If you are a victim of fraud, report it to your bank and the FTC as soon as possible.  

Jefferson Bank offers resources to help you stay protected against fraud. Download our Business Fraud Protection Checklist today!

 

The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its subsidiaries and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.