If you own a small business it pays to be aware of scams and exercise due diligence

Individuals and eBay warriors aren't the only people being targeted by advance fee and overpayment scams. Businesses, especially smaller ones, are now suffering losses with ever increasing frequency.

The Association of Certified Fraud Examiners noted in their last report to the nation that small businesses suffer "disproportionate fraud losses," when they become a fraud victim.

Part of the reason for this is large businesses employ people to deal with fraud. The other part of the reason is they can't afford the exposure (as well as) larger businesses can.

Report, here.

Rich Mintzer (Entrepreneur.com) did a pretty detailed article in January about how small business is targeted by fraudsters. He has some smart tips for business owners:

Smart Tip: Don’t ship any products to a buyer on a pre-paid basis unless you’ve done business with the company previously or can verify the legitimacy of its payment method.

Smart Tip: It’s better to be safe than sorry. Never send products or refunds to a first-time buyer until their check has cleared the bank.

Smart Tip: The bottom line is, if you haven’t seen a directory before and can’t verify that it’s actually distributed, you’d be wise to steer clear of any such offers.

Smart Tip: If it’s the vending machine business you’re interested in, do your own homework and contact companies you’ve done your research on. And be leery of local ads for new vendors that offer a toll-free number and a chance to make "big bucks."

Rich's tips (with more detail), here.

Michael Webster, an attorney practicing in Toronto, has an excellent site, which educates all of us on business scams:

Misleading Advertising Law (Due Diligence for Income Earning Opportunities).

A little awareness and (due diligence) can stop most fraud dead in it's tracks!

Small Businesses are often the victims of financial misdeeds

Large businesses often employ dedicated experts to protect their assets. Unfortunately, smaller business can't afford these resources, and therefore are more vulnerable to fraud losses.

And it's easier for these larger businesses to write-off their fraud losses. The sad truth is that - if not managed properly - fraud losses can put a smaller business "out of business."

The Association of Certified Fraud Examiners noted in the 2006 report to the nation that small businesses seem to suffer "disproportionate fraud losses," when compared to larger organizations.

I did a previous post, which links to the report, here.

I read an interesting article by Lena West (CEO of xynoMedia Technology) that offers some practical advice to small businesses.

Ms. West writes:

It is officially open-season on small businesses. Hackers, phishers, spammers and fraudsters often use small businesses as target practice before going after the big guys, though it's news that often doesn't make it in the headlines. No one really knows the true impact of online security breaches, as only 20 percent of businesses reported computer intrusions to legal authorities, according to the FBI and Computer Security Institute. And every online merchant knows the threat of bogus credit card purchases is one that never goes away.

Full story from e-commerceguide.com, here.

The story points on how to deal with and protect yourself from everything from data-breaches to credit/debit card chargebacks.

Since in my opinion (awareness is the best and most effective fraud tool) - this article is great information for anyone, who owns a smaller business.

Will a hot-line being staffed 24 hours solve the fraud problem in Los Angeles?

A story recently hit the press about Los Angeles County (potentially) losing $2 billion a year to fraud. That's a lot of taxpayer money!

This dollar figure was "estimated" (using Association of Certified Fraud Examiner statistics), which say that 5 percent of all revenues (generic) are lost to "employee fraud, waste and abuse." Nonetheless, there have been a lot of recent allegations of "too much fraud" occurring in Los Angeles County.

The problem with any fraud statistic is that the intention of the people - who commit financial misdeeds (fraud) - normally like to keep it rather anonymous. I keep seeing different figures (the $2 billion was from an article a couple of weeks ago), but the truth is - all anyone knows - is that it appears to be a substantial problem.

Now the County officials are announcing a fraud hot-line to report instances of government fraud and abuse will be manned 24/7.

The LA Times is reporting:

Ratcheting up efforts to crack down on bureaucratic waste, fraud and abuse, Los Angeles officials unveiled a 24-hour whistle-blower hot line Thursday to take tips from workers and the public.

The latest move to clean up City Hall comes two years after the City Controller's Office created a special task force to investigate fraud.

LA Times story written by Rick Orlov, here.

If you are a resident of Los Angeles County and have something to report, the number is (866) 428-1514.

In the recent article, I read quoting the $2 billion loss figure, there were also allegations that very few people are ever prosecuted, or even lose their jobs when caught committing fraud in the County.

In fact, a recent DailyBulletin.com story stated:

Despite the large number of prosecutions, critics said only a small proportion of county employees found to have engaged in fraud and misconduct are disciplined or charged criminally.

While investigators substantiated 120 fraud hot-line cases last year, only 38 employees, or 32 percent, were fired, suspended, transferred or allowed to resign.

Does this mean that the County is losing $2 billion a year to fraud, the hot line only netted 120 "substantiated cases," and of the personnel implicated - 68 percent of them are still employed?

I'm just an "average person," but to me, increasing the fraud hot-line hours isn't going to make this problem go away.

And not going after the problem "aggressively enough" isn't fair to the honest citizens of Los Angeles, who are "footing the bill" for all of this.

I wonder how many private companies would put 2 out of 3 people bilking their bottom lines back to work?

I feel sorry for the investigators trying to put a dent in this problem!

Here is another post, I did on fraud in Los Angeles:

Los Angeles Grand Jury Calls Child Care Program an ATM for Thieves

Is Bashing DHS for the Swift Raids Fair?

Suad Leija (courtesy of YouTube)

Recently, there were a lot of people bashing DHS because of the raids at the Swift meat packing plants. There were allegations that only 65 of those "detained" were charged with crimes, and that everyone else was "hard working and innocent." Of note, the associated press just reported that this number is up to 220, and DHS is still investigating. Just being here "illegally" is considered an "administrative matter," and not a "crime."

AP update, here.

Could this mean that some of the "fake identification" is of such "high quality" that it's taking time to establish criminal activity? It also might point out that the rights of those being charged are being considered, carefully.

After all, we live in a country, where people have rights.

DHS has maintained that the raids were part of a much larger investigation into organized crime and the mass production of fake identification.

I've always taken the stance that I have nothing against hard working people trying to make a better life for themselves, but that we can no longer afford to let criminals control our borders.

And besides hard-working citizens having their identities stolen, and used for illegal purposes, we have to consider the threat to national security. In 9-11 - several of the terrorists involved - used forged documents to enter the country and obtain legitimate identification.

In July, I did a post about how organized the mass production of fake identification is. According to the stepdaughter of one of the ringleaders of the organized crime ring behind it - they consider terrorism an "American problem."

The stepdaughter (Suad Leija) is now making the "YouTube" arena, and you can hear what she has to say, here.

CNN also did an interesting story (available on YouTube), which shows how easy it is for "anyone" to get fraudulent identification, here.

Also included is a lot of evidence that some of this fake identification is so good, it easily passes muster at a border crossing, or airports. Of note - the video shows card reading technology used a liquor store - which catches a lot of these fakes and points out that it isn't in use at our airports, or borders?

Maybe this is something DHS could look into, further?

I also did a post - where a writer from Colorado - who is an identity theft victim wondered aloud - if she was one of the people arrested at Swift?

I wonder if any of the critics of the Swift raids has had their identity stolen, and if this became the case, they would be so quick to judge the actions of DHS?