Cybercrime Tips

My intent here was to focus on combating fraud with QuickBooks, but some new cyber scams that put businesses at risk caught my attention, and I wanted to highlight them as well.  One is called "ATM skimming".  The way this works is that a crook adds some equipment to an ATM that causes you to inadvertently either give away the card number you are using and the PIN that goes with it.  Yikes!  There are a number of ways this is done, either cameras or scanning devices surreptitiously installed on the machine.  According to the folks at Bankrate.com fraudsters take about $1 billion a year this way.  Bankrate warns that you need to report missing money from your account within 2 days to be protected by your bank.  If you report it within 60 days your liability is limited to $500.  Besides regularly checking your bank balance, other tips to prevent skimming include:

-  Place one hand over the keypad when you key in your PIN

-  Use a number of ATMs regularly and keep switching between them.  This will allow you to notice if anything has changed about the physical configuration of the machine and the area nearby.  (If so, don't use it unless your bank verifies they made the change.)

-  Stay away from ATMs that are in dimly lit / isolated areas.  It's harder to keep track of changes to the machine and easier to install camera that can't be detected. 

The second type of theft involves malware getting into your computer and gaining access to your onlin account information.  Just at the end of September dozens of arrests were made world-wide breaking up a ring that used a version of the "Zeus Trojan" program to do just this.  The ring allegedly stole about $70 million dollars.  JP Morgan Chase, E*Trade and TD Amertirade accounts were among those compromised.  Again, the biggest prevention tool here is regularly checking bank balances to make sure they're where they belong.  (This is where QuickBookscan be a big help. It would take some setting up, but you could monitor accounts through reports on their balances.)   Making this particular crime ring even worse than those seen previously was their practice of jamming the victim's phone line for a week.  The bank can't reach you and you can't reach them.  If you think this is happening to you, a non-phone alternative is notifying the FBI at the Internet Crime Complaint Center Website. 

Check Writing Protection

One of the basic tenants for protecting your business financially is segregation of duties.  In particular you are supposed to make sure different people have the following responsibilities:  (1) authorize transactions (2) record transactions (3) have custody of cash (4) report transactions.  Needless to say for many small businesses this is an impractical set up.  However, not separating these activities is also an invitation to fraud and / or error that you should recognize and try to combat. 

Using QuickBooks compounds both the threat and an opportunity in this area.  Today I’m concentrating on a time saver that makes the business particularly vulnerable.  Checks printed with the signature.  I’m not saying don’t do it.  But you need to be careful.  QuickBooks 2010 makes it easy to do across multiple checks.  The person who prints checks with your signature image in one press of a button is essentially authorizing the transaction and controlling the cash.  If they are involved in other bookeeping tasks as well it just gets more dangerous.

One easy control step is to make sure the checks that do have your signature are associated with a segregated account.  It's not bullet proof control, but it limits potential damage.  If it’s for payroll the documentation of what amounts should be involved is probably part of running the payroll.  If it’s for bill payments, make sure you get a report of who is getting paid what before you move money to that account.  Whoever can print these checks with your signature cannot be the person who verifies these amounts.    

Let me digress for one minute about how to talk about making a change to this type of set up if you weren’t doing it before.  One of the most important components of my Five Step Business Protection Plan is talking about it.  If you talk about it often with all your employees it accomplishes multiple good things all at once.  First it sets a tone that says you are watching out for fraud.  This can engage like-minded individuals to be on the lookout and discourage those whose minds might move in the wrong direction.  Secondly, no one feels singled out for suspicion.  That can be helpful if you actually have to investigate someone, as it won’t trigger alarm bells.  Just as importantly, it helps trustworthy employees feel like you see them as just that.

Fraud prevention may sometimes feel awkward and like extra work.  It’s important to remind yourself that becoming a victim of fraud feels even worse.