A common misconception about cybercrime is that fraudsters only target individuals. However, all businesses, including start-ups, are vulnerable to many types of online fraud. This includes malware, ransomware and other types of cyber-attacks, social engineering from customers, and fraud within your company.
Protecting your start-up from these disastrous situations is important, especially considering the fact that around 50% of small businesses who suffer cyberattacks stop operating due to the financial damage. With this in mind, we’ve put together four types of fraud that every start-up should take measures to protect themselves against.
Payment fraud
One of the most common types of fraud that businesses face happens when “customers” attempt to make a payment with stolen credit card details, or in the case of PayPal, file a dispute to get their money back, despite the fact that you successfully provided what they paid for.
There are a variety of measures you can take to prevent this from happening. For example, you can implement a flagging system to take caution of payments made with free email addresses and from high-risk countries. You can also compare the location of the device making the payment to the billing address and prevent the transaction if they don’t match.
Social engineering
Every start-up owner should familiarise themselves with social engineering fraud. This usually involves little more than an individual taking advantage of your company by phishing, baiting or using diversion. Amazon is perhaps the biggest example, as they’ve been the victim of millions of dollars in fraudulent product returns over the past few years.
Another increasingly common example of social engineering is CEO fraud, as explained in-depth here: https://fraudwatchinternational.com/phishing/ceo-fraud-business-concerns/. Put simply, this involves an imposter extracting money from company employees by posing as a high-level executive.
Cyber attacks
Botnets, DDoS attacks, scripts and SQL injections are some of the common types of cyber-attacks that are becoming increasingly sophisticated, making it more difficult for unsuspecting businesses to do anything until it’s too late. Prevent cyber-attacks from happening to your start-up by implementing security measures throughout your processes.
Employee fraud
While it can be disconcerting to think that anyone within your start-up would commit fraud, this does happen, and you’d be better off safe than sorry. Be sure to perform background checks on everyone you hire to see if they have any criminal history. You should also run a credit report to check for any fiscal irresponsibility.
When considering a new employee for hire, be sure to run through their social media profiles. Check for grievances with past employers and any other tell-tale signs of malicious intent. Finally, you should implement a policy that outlines what is expected of your employees, including how they should behave and represent your star-tup.
Knowing about these common types of fraud is important, but taking measures to prevent them from happening to your start-up is even more important. This is one aspect of business that is well worth investing in, so be sure to do it as soon as possible.