Opportunistic fraudsters are very active in times of crisis. Stay ahead of them by looking out for three common red flags.

While security experts are fighting to protect your money, hackers are determined to get around them. Because of this, fraud is a constant threat—which is why one of the best things you can do for your business is learn about fraud detection and take action to reduce your risk.

Discover three common forms of fraud that affect businesses of all sizes and how to stop them in their tracks with early identification.

Who Does Fraud Affect?

78% of businesses were hit by payments fraud in 20182

Statistically speaking, virtually every business will be targeted by fraudsters at one time or another. Due to a comparative lack of audits, internal controls, and reporting, small businesses are particularly vulnerable to fraud.1 Fraud can impact businesses from numerous directions: externally from hackers, internally from employees, and from vendors and third parties as well.


Red Flag #1: Unusual or Suspicious Emails

$200,000: The median loss suffered by businesses with under 100 employees3

In what’s known as a phishing scam, fraudsters attempt to trick you into forfeiting information they can use to steal funds from you. You can protect yourself by exercising caution with emails by verifying links and sender authenticity through trusted channels. Use your email provider’s spam filter and consider purchasing anti-malware and anti-virus software for additional protection. Coach your employees on what to do if they receive suspicious emails.

Warning signs in potential phishing emails include:

  • Poor grammar and spelling
  • Sender demanding immediate action
  • Unusual sender email address
  • Misleading or deceptive links
  • Poor or inconsistent graphics and branding

Red Flag #2: Suspicious Employee Behavior

It’s an unfortunate reality that your employees may take advantage of your business.

Protect yourself by looking for these signs:

  • Refusal to take vacation or sick days
  • Sudden and significant lifestyle changes
  • Unusually close relationships with auditors and vendors

If you see any of these, take a step back, access the situation, and notify only necessary personnel (such as HR). Monitor peculiar activity and preserve documents that could be helpful during an investigation.

87% of occupational fraud is committed by first time offenders with clean employment histories4

Red Flag #3: Abnormal Supplier Conduct

As a business owner, you expect a certain level of professional ethics from your vendors, but supplier fraud is real.

The most common signs to look out for are:

  • Duplicate or rounded-up invoices
  • Checks that don’t clear
  • Unresponsiveness or sudden changes in behavior

If you suspect supplier fraud, start by confirming Federal Tax ID numbers and contact information of suppliers with the IRS. Question duplicate or incorrect payments and consider using a third party to review vendors. Pay using ACH or wire transfers to avoid illicit check activity.

Discuss Safety Tips with Your Banker

Fraud is a constant threat. With increasingly sophisticated scams appearing seemingly daily, it can be hard to keep up. The good news is that Santander can help you lessen your risk, quicken your fraud detection and keep your business safe. Speak with your business banker today to find out more.

1 https://www.pdr-cpa.com/knowledge-center/blog/small-business-fraud
2 https://www.afponline.org/ideas-inspiration/topics/articles/Details/afp-survey-payments-fraud-hits-record-high-of-78
3 https://www.journalofaccountancy.com/news/2018/apr/acfe-report-big-fraud-problems-small-businesses-2018-18780.html
4 https://quickbooks.intuit.com/r/trends-stats/fraud-statistics-every-business-should-know/

Readers should consult their own attorneys or other advisors regarding any financial or business strategies mentioned in this article. These materials are for informational purposes only and do not necessarily reflect the views or endorsement of Santander Bank.

Equal Housing Lender. Santander Bank, N.A. is a Member FDIC and a wholly owned subsidiary of Banco Santander, S.A. ©2019 Santander Bank, N.A. All rights reserved. Santander, Santander Bank, and the Flame Logo are trademarks of Banco Santander, S.A. or its subsidiaries in the United States or other countries. All other trademarks are the property of their respective owners.


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