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small business fraud plan

What to Do If Your Small Business Is Defrauded

No business wants to be the victim of small business fraud. But the odds of it happening to your company are a lot greater than you might think.

In a 2020 global survey, PricewaterhouseCoopers asked more than 5,000 companies worldwide about their experiences of fraud over the past 24 months. The response: Some 47% of companies had suffered at least one fraud, at an average of six frauds per company. The frauds were evenly split between internal and external perpetrators, with customer fraud, cybercrime and asset misappropriation among the most frequent forms.

There are ways to prevent small business fraud, but no measure is completely foolproof. That’s why it’s important not only to be vigilant about small business fraud – but also know how to respond to it.

Here, we’ll talk about what to do if you think you’re the victim of small business fraud.

Step 1: Collect Information

Your initial reaction might be to confront whoever you expect committed the fraud, but doing so could actually hinder any official investigation.

Instead, begin collecting information.

You’ll want to start small. Begin with details of the discovery itself – who found out about the potential fraud, when, and any specifics such as what was stolen and the potential economic damages. If one of your employees discovered the potential fraud, insist on confidentiality until the matter is resolved.

Step 2: Collect Evidence

You’ll also want to start collecting any evidence and other documentation related to the potential fraud.

In many cases, the evidence will include some sort of paperwork (digital or physical) related to the transfer of money. That might include purchase orders, checks, credit card receipts/statements and/or invoices.

That said, if the suspected source of fraud was a hack, you should avoid accessing the effected computer(s)/account(s) yourself. Instead, consult a cybersecurity specialist.

Step 3: Report the Fraud

Depending on the type of fraud, you should report it to one or several agencies. Among the places you might consider filing a report:

  • Local governments
  • Federal Trade Commission
  • Internal Revenue Service
  • Social Security Administration
  • Treasury Inspector General for Tax Administration
  • Internet Crime Complaint Center
  • Other federal government agencies
  • Other state agencies

USA.gov provides a wide selection of agencies you can contact and points you toward their pertinent information.

Step 4: Find Fraud Investigation Services

You may also want to enlist the services of an expert.

While you might be able to sniff out the fraud on your own, the cost of failing to do so is high. That’s why it’s prudent to reach out to trusted fraud examiners and forensics accountants who can uncover the facts and get to the root of the problem.

McManamon & Co. offers fraud and forensics services to small and midsize businesses, and we understand your need for critical and time-sensitive investigations. Working with counsel, we can help you determine what happened, how much is at risk, who’s involved, and identify recovery opportunities.

If your business has been the victim of fraud, reach out to us at 440.892.8900 or contact us online today.

Tags:  , , , , | Posted in Fraud, McManamon & Co., small business