Fraud Awareness and Prevention Policies: Safeguard Against Deceptive Practices

fraud awareness and prevention policies

Last modified on May 24th, 2024

Fraud can ruin your business. Alongside the direct financial fraud losses, your company can suffer reputational damages. To safeguard your business against B2B payment fraud, it is crucial to implement fraud awareness and prevention policies.

In the sea of options – and threats – what are the best fraud awareness & prevention policies?

Trustpair prevents fraud by continuously monitoring supplier credentials and blocking any suspicious payment campaign. Contact an expert to learn more!

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How to generate fraud awareness in your company?

Why are training and education so important?

Do you want to effectively fight fraud in your organization? Then make sure your employees know about it! As they’re the ones handling the day-to-day operations, they’re the ones most at risk. It’s especially true for finance employees and those who work in procurement.

Recognizing threats is paramount to your protection. An astonishing 42% of employees reported taking a dangerous online behavior, such as clicking on a fraudulent link. Phishing scams are very common and often lead to more elaborate types of fraud.

Your teams should know how to recognize and what to do in case of:

Knowing how to recognize fraudulent activity is necessary to deter fraud with third parties, but also money laundering.

As fraud scams get more creative, fraud awareness and prevention policies must include ongoing training. That serves a dual purpose:

  1. Updating them about the latest scam trends,
  2. Keeping it top of mind.

The Association of Certified Fraud Examiners has educational resources you can use.

Training should include elements about prevention, but also fraud detection and contingency plans. Everyone should know what to do when fraud is detected: report fraud to law enforcement agencies, collect forensic data, block unauthorized transactions, etc.


How to turn your organization into a “fraud-aware” company?

There are two approaches to cybersecurity: reactive and proactive. The bigger your company, the more you should lean towards the latter. At this scale, it’s not a matter of if fraud will happen, but of when.

For your fraud risk management strategy to work, your whole company needs to be on board. That doesn’t just mean training as we saw above. It’s about your organization becoming fraud aware. Fraud awareness and protection policies must become a part of your culture.

Concretely, there are several ways to do that. Here are a few examples we’ve seen clients use at Trustpair:

  1. Internal communications: a Slack channel, a newsletter, or even monthly talks about fraud prevention and cybersecurity
  2. Referent employee: having at least one person in each department whose role is to ensure security processes are respected at all times. While it typically falls on the manager, it can also be someone else. What’s important is to be clear about who that person is, and what the processes are.
  3. Drill alerts: just like fire drills, “fraud drills” can help test your company’s defenses and reactions. It’s a great exercise to see where you stand and what additional measures you can set up. Some organizations choose to hire white hat hackers (ethical hackers) to have an external point of view, but you could ask your IT department too.


How to Take a Stand Against Fraud with prevention policies?

Set up the right security measures

Fraud awareness and prevention policies go hand in hand. Setting up security measures will ensure your organization is adequately protected against fraud.

Here are a few examples of what you can do:

  • Set up a double authentication process,
  • Encrypt communications containing personal information,
  • Change login credentials and tokens regularly,
  • Run security checks with antivirus software before opening attachments to prevent malware.

Alongside these cybersecurity measures, we also encourage you to map out and review your procure-to-pay process to identify where potential vulnerabilities.

One of the areas to focus on is account validation, ie making sure you know who you’re doing business with. Checking who your clients and suppliers are will protect you from financial fraud.

One thing we recommend at Trustpair is to always check your suppliers’ credentials before you send any payment. That alone ensures you haven’t been compromised and prevents you from being a victim of fraud.

While you can do this manually, it can be time-consuming and error-prone. Some information is also hard to come by and requires in-depth research. Our software runs automatic and real-time third-party checks, making this process more efficient and secure than doing so manually.


Use the right internal controls and processes

You can add another layer of protection to your organization by adopting the following internal processes:

  • Segregation of duties: an important concept in fraud protection, it means splitting responsibilities so that no one person has too much control over a process. Instead of having the same person ordering goods and paying for them for instance, you split it into different parts. It makes it harder to commit fraud like invoice fraud, embezzlement, or another kind of white-collar crime.
  • 4-eye principle: it’s requiring two people (four eyes) to approve key operations to ensure everything is in order. It’s somewhat similar to the segregation of duties but focuses on getting double approval for one operation. Two people are less likely to fall into a trap, so it reduces your risk of fraud.
  • Data management and governance: data privacy regulations (like GDPR and the CCPA) make it harder for a fraudster to commit a data breach. By being compliant with them, you also protect access to your third-party data. It’s also important to establish a policy regarding access to sensitive information in your company: what can be accessed from where? What information is safe to be shared on LinkedIn?

Use data analytics to combat fraud

The great thing about finance digitalization is that you have access to a lot of data. Using big data and artificial intelligence, digital tools are now able to detect patterns and make suggestions.

Tools with machine learning (like Trustpair) can detect patterns of fraud and alert you in case of possible fraud. It happens in two stages:

  1. Each transaction is given a score by an algorithm.
  2. If the criteria are met, you’ll receive a fraud alert.

For example, imagine a score of 5 is attributed to a payment to a supplier. That might be OK for you if this is an organization you know and trust. But if it’s the first time you do business with them, 5 might be too high risk. You can compare this score with the rest of your data and make verifications before proceeding to pay your supplier.

You can use both machine learning and rule-based detection to protect yourself against fraud. With Trustpair, any suspicious activity is flagged and blocked to prevent financial fraud. You can then check the information manually and decide what to do.

Software for fraud prevention

Software solutions can help detect and prevent fraud. As well as detecting signs of fraud in a sea of data (like we saw above), they help streamline your processes.

Instead of having to check your third-party data before sending any payment, you can use a solution like Trustpair. Our software does continuous audits of your third-party credentials to ensure you are sending funds to the right account.

That’s especially useful for oversea suppliers, whose data is harder to come by. We use the most reliable data sources worldwide to prevent international fraud.

Using digital solutions is less error-prone and time-consuming than doing it manually. It also means your team’s time is used for more strategic tasks.

And to really make your security processes seamless, choose anti-fraud software that integrates into your P2P chain. Trustpair for example integrates with ERPs like SAP.


How to detect fraud when it’s happening

Fraud awareness and prevention policies are not always enough. Indeed, to efficiently protect against the risk of fraud, you need both fraud prevention and detection.

This way, you can catch fraudulent activities before the worse happens. Or at least, prevent it from happening again.

Checking your bank accounts

Regularly checking your business bank account is a great way to reduce fraud. Integrating it into your day-to-day detection practice means your team knows what “normal” looks like – and what looks suspicious.

It’s especially true if fraud has happened already, as fraudsters tend to commit multiple frauds in the same organization.

You can automate these checks with software like Trustpair. We facilitate the automatic checking of accounts and track your merchant data 24/7 so you don’t have to! If our solution spots any anomaly, we’ll block the payment and you’ll receive an alert straight away.

Using internal control

Setting up internal controls can help detect fraud while it’s happening. Internal and/or external auditors also help deter fraud like money laundering from happening.

Whether you use a separate department to control your processes or not, it’s important to carry out regular detective controls. Here are some examples of internal control measures:

  • Manually inventorying your goods,
  • Double-checking your employees’ expense reports,
  • Verifying your financial reporting

Setting these up serves a dual purpose:

  1. Detecting fraud by spotting red flags,
  2. Discouraging internal fraud.

Using Software detection

Fraud detection software help with eradicating the risk of financial fraud. A tool like Truspair will send you live warnings in case fraud is detected – prompting you to act before it’s too late.

You’ll be protected even in case of identity theft, where scammers impersonate someone you know. We intervene at the last step before any payment is sent. Our automatic checks of your third party’s credentials happen in real-time, meaning you can always trust you’re paying the right account.

200+ companies are already using Trustpair to protect their organization against fraud. Contact an expert to learn more!


Key Takeaways:

  • Fraud awareness and prevention policies are both necessary for your company to be protected. Becoming a cyber-aware company and setting up adequate protection measures is key for fraud prevention.
  • Trustpair helps you eradicate the risk of financial crime by automatically checking your third party’s credentials.

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