I recently attended a fraud prevention seminar at The Cintas Center hosted by US Bank. The speaker was Frank Abagnale (the movie “Catch Me If You Can” was based of his life) and he was great. It was eye opening to hear how much money is stolen every year from consumers and small businesses. In fact, most of the theft within small businesses is from an employee that you’d never expect. I’ve not taken this many notes at an event in a long time and I’m going to be putting up some of his links and suggestions. Below you’ll find my top 10 take-aways from this event, and I’ll warn you, you’re probably not doing ANY OF THESE. He had every business owner in attendance wondering if they had money missing.
The 1 word you’ll hear throughout this is “Opportunity”. Frank says that is the biggest reason for theft.
1. Bank Statements – Have ALL company bank statements mailed to your home. WHY, because this takes away the Opportunity for your accounting department to alter the statements and hide something they may be doing behind your back. In fact, this is a major issue with many small businesses. An underpaid accounting clerk thinks they are owed something, are they taking it from you?
2. If they steal, or should I say WHEN they steal from you – There is 1 branch of the US Government that no one wants calling them, the IRS. Many times it’s hard to prosecute a theft by an employee or vendor. If all else fails and you can’t get your money back, send them a 1099. Take the write-0ff and let the IRS deal with them. Frank said that this threat alone will have them calling to arrange a payment plan.
3. Fake Money – Most employees don’t know how to recognize fake money. PH pens don’t work all the time and can easily be tricked. If you are in a cash business, your cashier should have a magnifying glass and know what to look for on the different bills. For example, the $100 bill has “United States of America” on Benjamin Franklin’s jacket. You would only see this detail with a magnifying glass. This is just 1 of many items that fake bills won’t have.
4. Shredders – You should be shredding EVERYTHING, but only with the Micro Shredders. The most popular Strip Cut and Cross Cut shredders are easily put back together. In his presentation Frank showed how the FBI pieced together numerous garbage bags on shredded documents to find out exactly what they needed to know. With Micro Shredders, it”s impossible.
5. Your Checks – I was amazed at how easy it was for a check to be changed. He took a check that had just been printed with a ink jet printer (what he said is commonly used). He applied a piece of scotch tape and put it over the payee and with a few presses, it lifted off the payee, which he then entered his name. He talked about how this happened to a national magazine that ended up printing a story on check fraud because of this. They sent a subscriber a refund check of $33.33. Someone took that check and forged it to a different person for $333,000.33. It worked, the guy was off with the cash 4 days later and the magazine didn’t catch it until the next month. There is only 1 check that is FRAUD PROOF, it’s Abagnale Super Business Check, it’s a must see.
6. Your Pen – Yes your pen that you sign checks with. The ONLY pen (according to Frank) that is permanent is the Black Uni-Ball 207 Gel. Believe it or not this inexpensive pen found at any office supply store is the only pen will leave the ink on permanently. No chemical wash or scotch tape trick will take it off.
7. Positive Pay – This is a system that banks Cash Management Departments have that allows you to send them a file each day with the checks written that day (must be done before checks are cashed). When the checks are presented for processing, it automatically matches the information you supplied. It compares the account number, the check number, dollar amount and sometimes the payee name on the check. If all components don’t match exactly it becomes an “exception item.” The bank then contacts the customer to determine each exception item’s authenticity. If there is an issue and something fraudulent is exposed then the check is returned unpaid.
8. Wire Transfers – This is one of the easiest ways to lose a LOT OF MONEY. Wire instructions contain all the information necessary to draft against a bank account. To avoid this scam, set up a separate account that is used exclusively for incoming credits. Place the account on “no check activity” and make it a “Zero Balance Account” (ZBA). This will save you from any major headaches.
9. Copy Machine Hard Drives – Most copy machines have a hard drive that stores EVERY IMAGE that you’ve ever copied. If you ever get rid of your machine you want to remove the hard drive. Frank talked about a time when they went to random dealer of used machines and pulled the hard drive from a few machines and they found many items that these companies would not have wanted in the wrong hands.
10. Know Who To Look For – More than 80% of occupational fraud cases, and 95% of their resulting losses, come from six departments: accounting, operations, upper management, sales, customer service, and purchasing. Two-thirds are male and they cause twice as many losses as females. More than half of all cases are committed by people 31-to-45, but the greatest losses come from 60+ upper management. 86% of perpetrators were first-time offenders making background checks less effective. What this also means is that you probably have what you think is a good relationship with this person. This is why you have your bank statements mailed to your home.
If you get a chance visit Franks website, www.abagnale.com. And i you ever get invited to hear him speak I highly recommend you attend.