Brazen Fraud and Theft, Part 2 – Phishing and Check Fraud   

by | Apr 4, 2024

Brazen Fraud and Theft, Part 1 – Cash Crimes 

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We’re continuing our three-part series on brazen fraud and theft. Throughout my career, I’ve discovered fraud and theft to be significantly more

common in businesses than we might hope or expect – in fact, it’s a reality that most business owners will have to face issues related to theft of some kind. To help my clients and friends become more informed about different kinds of business-related theft, we’re diving into several types of fraud which I have seen: cash crimes, phishing, check fraud and embezzlement, and providing tips to prevent or catch these acts from devastating your business.    

Before jumping into the world of phishing and check fraud below, make sure to check out our first article in this series on cash crimes; this is mandatory reading for any business accepting cash payments.    

Phishing 

Phishing involves cybercriminals attempting to trick you into revealing sensitive information, like passwords or bank account details, through deceptive emails or messages. These messages often look and sound legitimate! They convince you or your unsuspecting employees to click on a link or share information – usually under the guise of having you verify your account or fix an issue. These criminals will then use that information to directly access your financial accounts or even steal your identity.   

Here are several actual examples of phishing we’ve seen impact our clients:   

  • A business owner received a phone call from the IRS demanding money for delinquent tax and threatening criminal prosecution. Mired in fear and panic, our client sent hundreds of dollars via Zelle to a fraudster. COST: $700    
  • Another client received a WhatsApp message appearing to be from their largest client requesting her to go buy gift cards for a promotion. Once she purchased the gift cards, the “client” requested she reveal the secure codes on the back and send them via SMS. COST: $4,000 
  • We received multiple email messages from a “vendor” indicating that the bank account information to pay large invoices had changed. Upon careful examination, there were just a few characters off in the email address. POTENTIAL COST: $30,000+ 
  • We received a request to follow up on an invoice for a client for whom we handle accounts payable. When the invoice was requested, an invoice for $20,000 was submitted for legal fees, with a subsequent message from “our client” instructing us to pay the invoice today. A phone call to the client confirmed there was no such invoice, and definitely, do not pay! Upon further examination of the email, the email address behind the name was not even close to the client’s email address. POTENTIAL COST: $20,000 

Check fraud  

Check fraud directly targets businesses that issue hard checks of any kind – whether you print them from your office or send them through your bank account online. Check fraud might include forging checks, altering payees on checks or creating counterfeit checks! This type of fraud can lead to significant financial loss and complications with your bank, affecting your business’s cash flow and credibility.   

  • Our client’s landlord indicated they did not receive our rent check, but the check from the bank had clearly been cashed and issued. When a copy of the check was requested, the landlord’s name had been “washed,” and a new payee was listed in the name field of the check.  POTENTIAL COST: $1,200 
  • For a client who issued all checks through QuickBooks, we saw several checks submitted to the bank for which there were no records in the software. We forwarded images of the checks to our client requesting information on the payees to whom these checks were written, as there were no such vendors or employees associated with our client. Someone had stolen a check off an employee’s desk which was not stored securely, altered the name on the original check and then created additional checks using the routing and account numbers from our client’s bank account. It’s important to note that prior to our engagement with this client approximately four months earlier, no one was overseeing bank transactions or expenses for the business. POTENTIAL COST: $35,000+ 

We’ve seen similar types of check fraud with at least three other clients who have similar stories.  In all cases, our clients worked with their bank to have the funds returned. However, in all cases, it took weeks to months to resolve and in at least a couple of scenarios, required closing the clients’ primary bank account resulting in late fees, returned charges and the many administrative hours required to make such a significant adjustment. 

Preventing phishing and check fraud   

We closely monitor our clients’ expenditures to stay on top of these kinds of fraud. Any request for money or changes to banking information is confirmed with a phone call directly to our client or vendor. And we never use the phone number included in the request. We use internal, existing contact information for our clients or financial institutions to ensure we aren’t calling the scammers!     

Unorthodox requests via email trigger an additional review of the sender. We scrutinize the email address and check that replies are set to be sent to the same legitimate email address. (You can do this by viewing the sender information in the header of the email details.)   

We recommend avoiding the use of payments via check whenever possible. We manage almost all accounts payable using electronic payments through our bill payment processor, BILL, and leverage their security protocols.   

Zelle and Venmo payments cannot be reversed or returned by your bank. Always be 100% sure you know exactly to whom you’re sending money, for what and have documentation you recognize and can verify with your finance professional. 

And lastly, no one from the IRS will EVER contact you by phone! The IRS uses the United States Postal Service for all communications. Keep these points in mind if “your bank” contacts you by telephone and asks you for your password or account information, to confirm a code sent to your phone or send money through Zelle. They won’t!   

Having a reliable financial partner like Fritz Financial Solutions can be an invaluable asset in preventing and addressing theft. We can also assist in analyzing your financial data to spot irregularities and potential fraud. Know that fraud can’t always be detected immediately, but it often becomes apparent after analyzing expenditures and patterns over a period of time.   

While having reliable financial partners is crucial in tackling fraud and theft, they cannot do it alone. Your engagement is critical. You need to carefully review the reports you are provided and actively collaborate with your financial team, who should be there to guide you every step of the way.    

If you need additional financial guidance for your business, contact us today to get started! Plus, stay tuned for the next post in our series on embezzlement for more tips on keeping your hard-earned money safe where it belongs.    

  

Brazen Fraud and Theft, Part 1 – Cash Crimes 

Over the years, we've had the unfortunate experience of discovering that several of our clients were victims of fraud or theft. (Gasp!) This sad but true situation is a reality for most business owners. We are not talking about the dramatic, masked burglar scenes from...

Traditional forecasting can be a losing endeavor  

If you're a business owner, I bet you’ve been told you should be forecasting. This traditional advice suggests that there is a specific model to follow or a manual to use. However, as you and I both know, the reality is that when life gets in the way, your forecasting...

Understanding Financial Accountability  

"I'm not here to give you the good news."  I say that phrase to clients much more often than you might think. Because I ultimately want to celebrate their business's success with them, I’m there to tell them the actual state of their company's finances and guide...

Trust and Commitment in a Remote Team 

A couple of months ago, I made my first overseas trek since 2017 – not for vacation – but to meet with the rest of the Fritz Financial Solutions team of accountants in the Philippines. It was important to me to show these women the time and attention needed to...

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