October is National Cybersecurity Awareness Month, which makes it a great time for individuals and businesses to review how they protect their financial information, accounts, and sensitive data.
Technology has made it easier than ever to manage finances, communicate with clients, pay vendors, and conduct business online. The downside is, technology has also created more opportunities for fraud. Scammers continually find creative ways to impersonate trusted organizations and individuals, steal information, and convince people to send money.
Fraud awareness is an important part of protecting both your personal and business finances. Knowing common warning signs and establishing safeguards can help reduce your risk.
Understand How Fraud Has Changed
Fraud is not always easy to recognize. Today’s scams have become highly sophisticated, and can arrive through email, text messages, phone calls, social media, or even invoices that appear legitimate.
Scammers frequently impersonate organizations or individuals people already know and trust.
A message might appear to come from a bank, government agency, vendor, coworker, or company executive.
One common tactic is creating a sense of urgency. A message may claim that an account will be closed, a payment is overdue, or immediate action is necessary. The goal is to get the recipient to react before taking time to verify the request.
If a financial request is unexpected or unusually urgent, slowing down and independently verifying it can be one of your best defenses.
Watch for Phishing Attempts
Phishing remains a common way criminals attempt to obtain sensitive information.
A phishing email or text may look like a legitimate communication and ask you to click a link, open an attachment, update an account, provide a password, or share financial information.
Businesses can be particularly vulnerable because scammers may research employees and companies to make messages appear more convincing. An employee might receive an email that appears to come from a supervisor requesting a wire transfer or sensitive company information.
Employees should know that logos, email addresses, and caller ID information can be falsified. When something seems unusual, verify the request through a known phone number or another trusted method rather than using the contact information provided in the suspicious message.
Be Careful With Invoices and Payment Requests
Fake invoices are another potential threat for businesses.
A fraudulent invoice may appear to be for a familiar business expense or claim that payment is overdue for a product or service. Businesses with multiple employees approving purchases or processing payments can be especially vulnerable if procedures are unclear.
Establish a consistent process for reviewing and approving invoices. Employees responsible for payments should confirm unfamiliar vendors, changes to payment instructions, and unusual requests before sending money.
Extra verification is particularly critical when someone unexpectedly asks for a wire transfer, cryptocurrency, gift card, or change to established payment information.
Protect Your Accounts
To make it more difficult for criminals to access financial and business accounts, strong security practices are needed.
Use strong, unique passwords rather than using the same password across multiple accounts. Multifactor authentication adds another layer of protection by requiring an additional form of verification before someone can access an account.
Software and devices should also be kept up to date. Security updates frequently address vulnerabilities that could otherwise be exploited.
Businesses should consider who has access to financial systems and sensitive information. Employees should have access to the information they need to perform their jobs without automatically having access to everything.
Be Alert to Tax-Related Fraud
Financial fraud can also involve taxes.
The IRS warns taxpayers and businesses about fraudulent communications designed to obtain personal and financial information. Warning signs can include unexpected messages that create urgency, make threats, promise unusual refunds or credits, or pressure someone to provide information or make an immediate payment.
Businesses also need to protect information such as Employer Identification Numbers and employee records. Stolen business or employee information may potentially be used for identity theft and other forms of fraud.
If you receive an unexpected tax-related communication, verify it through official channels before responding or providing information.
Make Fraud Awareness a Team Effort
Cybersecurity is not just an IT responsibility. Employees throughout an organization can play a role in helping to prevent fraud.
Regular training can help employees recognize suspicious emails, unusual payment requests, fake invoices, and other common scams. Businesses should also establish a clear process for reporting something suspicious.
Employees should feel comfortable asking questions before acting on an unusual request. Taking a few extra minutes to verify something can be far less costly than trying to recover funds or information after fraud has occurred.
Know What to Do If Something Happens
Even with strong safeguards, fraud can still occur.
If you believe financial information has been compromised, act immediately. Contact the appropriate financial institution, change affected passwords, and review accounts for unauthorized activity.
For businesses, a suspected cybersecurity incident may also require contacting your IT or cybersecurity provider and determining what information or systems may have been affected. Depending on the situation, additional reporting or notification requirements may apply.
Make Security an Ongoing Priority
National Cybersecurity Awareness Month provides a timely reminder to review your financial and digital security practices, but fraud prevention should continue throughout the year.
Scammers rely on people being distracted, rushed, or unfamiliar with their tactics. Creating strong internal procedures, training employees, protecting accounts, and taking time to verify unusual requests can help individuals and businesses reduce their risk.
Protecting financial information is part of protecting your financial future.
Have questions about protecting your business finances and establishing strong financial practices? Contact Hayes & Associates today or email us at info@hayes-cpa.com to get started.
