29/11/2017 16:40 SAST | Updated 29/11/2017 16:40 SAST

How To Protect Your Business From Festive-Season Fraud

'It is more lucrative for criminals to target businesses, rather than individuals, as the payoff in a commercial environment is significantly higher.'

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South African businesses must be extremely careful about any documentation containing sensitive information about their business. That's because if it falls into the wrong hands, it can be used fraudulently.

This is according to the CEO of Debtsource, Frank Knight, who spoke to HuffPost ahead of the festive season -- which normally sees an increased number of commercial identity-theft cases being reported.

"It is more lucrative for criminals to target businesses, rather than individuals, as the payoff in a commercial environment is significantly higher," Knight said.

These facts have not been lost on local fraudsters.

This is because normal lines of trade credit are usually more than those granted in a consumer environment.

"These facts have not been lost on local fraudsters," Knight pointed out.

He added that criminals can easily falsify company registration papers and copies of directors' identity documents to accompany new applications.

"It is more common in businesses that buy goods from others."

"Entities who sell goods that are easily resold are normally targeted. Fast-moving consumer goods, electronic equipment and building and hardware material suppliers are typical examples of industries that are more prone to being hit."

Companies in these higher-risk industries should be more vigilant, cautions Knight, but anti-fraud measures should be implemented across all sectors.

Three ways to ensure better protection for companies:

1. Properly vet your employees before hiring them

Knight said some fraud cases have been traced back to internal employees who handle or are exposed to a company's sensitive information. "Be diligent. Do credit and criminal record checks for all your employees," he advised.

2. Destroy paperwork that contains highly sensitive data

If the information could compromise the identity of your business, shred it using a confetti shredder, so the paperwork cannot be pieced back together.

3. Electronic notifications

Sign up for electronic notifications through your banks and creditors. In this way, you will immediately be alerted to suspicious activity on your bank's accounts. Also be in the habit of regularly ordering a copy of your business's commercial credit report, to see if there has any suspicious activity involving your bank or creditors.

To suppliers:

1. Watch out for: "We will come and collect the goods."

Knight pointed out that some criminals prefer to collect goods themselves, even if the norm for a particular supplier is to deliver goods at a company's physical address. Fraudsters do this because there is no physical address, so they can take the supplies and run with no trace. "Unless absolutely required, never allow new account applicants to collect goods until payment has been received."

2. Diligently check supplied information

That's because fraudsters have been known to use false telephone numbers and pretend to be people responsible for signing off on business transactions. Fast verification is possible through a quick internet search, to ensure that the contact details on the credit application actually match the company's contact details.

"If an applicant states that they specifically want to be contacted on a mobile number, make a point of contacting the company on the referenced landline number and verify whether such a contact person is actually employed. In addition, a quick conversation with the company's buyer, owner or financial controller at the referenced number is probably the most effective procedure to combat commercial identity theft," Knight advises.

"The scary part is that detecting this type of fraud is difficult, and may mean that entities will have to change some of their procedures on normal account applications. Yet if business identity theft goes on too long without detection, it can be difficult to recover, and a business could potentially go bankrupt," Knight explained.