Three Ways to Protect Your Organization From Fraud and Scams

By: Sam Mack, Senior Accountant
Cordell, Neher & Company, PLLC

Business owners spend a lot of time and effort ensuring their operations run smoothly, from delivering quality goods and services to providing accurate financial statements and tax returns. Yet one scammer going after your company can bring it all down, harming your reputation and your revenue.

One of the best ways to protect your business is understanding the types of scams so you and your employees know what to look for. Here are three common types of scams:

Electronic signatures

Electronic signatures are a convenient and efficient substitute for “traditional signatures,” but they can also expose your business to fraud and unauthorized signing. If you use electronic signatures in your business, ensure these two things:

  1. Electronic signatures are valid. How do you ensure an electronic signature is valid without an in-person verification? The lengths you go to may depend on the size or nature of the contract. There are several ways to authenticate a signer’s identity, including knowledge-based authentication (KBA), taking a video of the signing, and employing a notary.
  2. Electronic signatures are compliant. In the U.S., electronic signatures must comply with the Electronic Signatures in Global and National Commerce Act and the Uniform Electronic Transaction Act (UETA). These laws generally require an intent to sign and consent to do business electronically.

Modern e-signature solutions comply with these requirements, so make sure you use a solution provider that takes appropriate steps to verify a signer’s identity and comply with applicable regulations and best practices.

Client portal access

Client portals make it easy to send and receive documents and collaborate on projects with clients, and other third parties, but they can also open the door to data leaks, breaches, and hacking incidents.

Here are three steps to help keep data in a client portal secure:

  • Authentication: That typically involves entering a valid username and password before being granting access to the portal. Provide each user a unique username and password through a secure channel before logging in.
  • Authorization: What authority does the user have to perform specific tasks after logging into a portal? Your employees may be authorized to access more areas or perform more activities than a client or another third party, such as a banker, attorney, or consultant.
  • Audit: The final element is an audit trail, which tracks a user’s access and activities while in the portal.

Tax scams

Tax scams take many forms as scammers try to steal money, identities, tax refunds, and more. Often, these scams start with a phone call, or email claiming to be a representative of the IRS. These scammers may demand payment of back taxes and penalties or ask an individual to confirm their Social Security or bank account number to receive a tax refund.

Knowing how the IRS will and won’t initiate contact is one of the best ways to avoid falling victim to tax scams.

In most cases, IRS contact starts with a letter or notice delivered via the U.S. Postal Service. Following that initial notice, the IRS may call or visit an individual’s home or office to collect an overdue income or employment tax payment, follow up on a delinquent return, or tour a business’s premises as part of an IRS audit or criminal investigation.

The IRS will not:

  • Demand payment via a prepaid debit card, gift card, or wire transfer or insist an individual make a payment over the phone.
  • Threaten to send local law enforcement or immigration officials to arrest an individual for not paying your tax bill.
  • Demand payment without allowing an individual to review or appeal the amount they owe.
  • Initiate contact or request personal or financial information via email, text message, or social media channels.

If you believe a scammer has targeted you, you can report IRS impersonation scams online or call the IRS at (800) 366-4484. If your company needs assistance setting up the safeguards addressed above or strengthening your cybersecurity efforts, contact the team of professionals at Cordell, Neher & Company, PLLC at 509-663-1661 today.

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