Summing It Up

How to Prevent Fraud in Your Business | Freed Maxick

Written by Nicole Busshart | Fri, Jul 16, 2021 @ 01:30 PM

COVID-19 has produced the perfect storm for financial crimes

Rapid changes in the environment in which organizations operate, such as working from home, has created increased risk to their control environments. The COVID-19 pandemic, while affecting day-to-day operations ranging from shutdowns to remote work spaces and more, has created a “perfect storm” of opportunity for fraud, theft, embezzlement and other significant financial crimes.

The purpose of this blog post is to identify the conditions where COVID-19 related fraud can flourish in your organization and to offer suggestions on how to you can better protect yourself from serious financial losses.

A Perfect Storm for Financial Crimes

Fraud typically occurs when three elements align: opportunity, pressure and rationalization. With the COVID-19 crisis, fraudsters have the perfect storm in order to perpetrate fraud.

  • With the uncertainty and social disorder of the world today, fraudsters are exploiting the deviations in their normal environments to commit fraud.
  • Financial uncertainty and lack of job security has created more pressure for fraudsters to commit fraud.
  • Uncertainty in every environment has made it easier for fraudsters to rationalize their deviant behavior.

Across the world, there has been an increase in fraudulent scams due to the Coronavirus. Fraudsters are using the pandemic to come up with more successful scams by taking advantage of everyone’s fear and anxiety. Businesses are focusing more on limiting the COVID-19 impact on their organization and less on the time and money spent on limiting the risk of fraud. This can lead to weak spots in a business for fraudsters.

Scams Associated with COVID-19

Some of the scams associated with COVID-19 are:

  • Phishing Scams: Fraudsters are using malicious links and attachments regarding the spread of COVID-19, COVID vaccines, protecting yourself from the virus, and containment measures, within emails to lure victims into fraudulent situations
  • Fraudulent Websites: There has been an increase in the number of fraudulent websites masked as COVID-19 information or relief that has drawn many people into dangerous situations.
  • Compromised Business Emails: With an increase in remote working, many organizations have seen an increase in emails requesting payment or sensitive information disguised as senior management.
  • Financial Scams: With the rollout of stimulus packages and government grants, fraudsters have used phone calls, emails, text messages, and social media as a way to entice people to click on links, send financial information, or leak personal information to fraudsters.

Key Tips for Weathering the Storm of COVID-19 Related Fraud

Here are a few suggestions from Freed Maxick's Fraud Prevention & Training department to help reduce the number of scams and protect your organization: 1. Follow up on suspicious emails. Contact the person you believe might have sent you a suspicious email separately to ensure the information or request within the email is legitimate. Check email addresses to make sure they are correct. Hover over links to make sure the path is the same as the link listed. 2. Install anti-malware and anti-virus software on your devices. Make sure to keep the software up to date to ensure it is working effectively.3. Conduct background research. Research the information within an email, text message, phone call, or social media message before giving out any information. Be wary of any person, business, or organization requesting money or highly sensitive information via unusual channels.

If you suspect fraud, or want a review of your financial controls to identify weaknesses in your fraud defense, we are available to help. For a complementary consultation, please contact us via form, here; call me at (716) 332-2761, or send an email to nicole.fitzgerald@freedmaxick.com.