Fraud prevention is a critical concern for small businesses, which often lack the resources and infrastructure of larger corporations to combat fraudulent activities. However, despite their smaller scale, these businesses are prime targets for various types of fraud, from financial scams to cyberattacks, potentially resulting in significant financial losses and reputational damage. In fact, according to the SBA, 43% of all cyber attacks happen to businesses with 1,000 employees or less.
Fortunately there are a number of practical steps that can help safeguard your business’ vital data. This comprehensive fraud prevention checklist designed specifically for small business owners can help you proactively protect your operations, assets, customers and reputation from the ever-present risk of fraud.
1. Implement a solid password policy.
Your first line of defense is a powerful offense, and that means developing a strong, unique password for each account. While it’s tempting to use something easy so you don’t forget it, as the Cybersecurity and Infrastructure Security Agency (CISA) says “an easy-to-guess password is like locking the door but leaving the key in the lock.”
Instead you can use a password manager, such as 1Password or Bitwarden, to “remember” the more complex passwords CISA recommends. They advise using a password that’s long—at least 16 characters—and unpredictable, which can be accomplished by either using a completely random string of mixed case letters, symbols and numbers; or trying a “passphrase,” which is a phrase of several unrelated words.
2. Turn on multi-factor authentication (MFA).
CISA has found that using MFA wherever possible makes you 99% less likely to be hacked. Making this the default setting for your email and all financial accounts helps safeguard critical data.
3. Encrypt sensitive data to protect it from unauthorized access.
Are you your own IT department? Fortunately, you don’t have to be super tech-savvy to add user-friendly encryption software. This step essentially puts your data into a “secret code” that only you or someone else with the key can read, keeping it safe from anyone who intercepts or otherwise hacks into your system. Your operating system likely has its own built-in encryption features that creates this key-protected file.
4. Update software regularly.
Keep your operating systems, applications and antivirus software up to date makes you less likely to suffer a breach. One easy way is to enable automatic updates whenever possible, which means you’ll have the latest version with the most recent patches and security features.
5. Consider a virtual private network (VPN).
A VPN encrypts your internet connection, which creates a secure way to transmit data between your device and your company’s network. This is particularly important when accessing sensitive information or conducting financial transactions over public Wi-Fi networks, which are susceptible to eavesdropping and hacking attempts.
The VPN setup process is relatively straightforward and typically involves creating an account, downloading the VPN client onto your devices (computers, smartphones, tablets, etc.) and logging in with your credentials. Make sure you or your IT support offers step-by-step directions so employees working remotely know how and why to use the VPN.
6. Educate your team.
Even if it’s inadvertent—and most slips are—research shows that 82% of data breaches involve a human element. Develop clear cyber and fraud policies and procedures for employees to follow and have frequent training on cyber best practices. The goal is to encourage a culture of vigilance and accountability regarding fraud so they realize it’s everyone’s responsibility.
Work with employees to create their own strong passwords and ensure they use MFA and encryption as needed—especially when they use their own devices for company business. Regular reminders about common phishing scams and social engineering tactics can help keep them aware of the latest sneaky strategies that are being deployed.
7. Monitor financial accounts.
Despite your best efforts, breaches can still occur so it’s crucial to regularly review bank and credit card statements for suspicious activity. Reconcile accounts frequently so you can detect discrepancies promptly and set up alerts regarding unusual transactions or account access.
The most important aspect of protecting your business from fraud is by educating yourself on the risks. Head over to Valley Bank’s Learning Center to learn more.
For informational/educational purposes only. This content is intended to help clients protect themselves from cyber fraud, not to provide a comprehensive list of all types of cyber fraud activities nor to identify all types of cybersecurity best practices.
