U.S SMBs More Prone to Fraudulent Attacks

A shift from the use of paper records to electronically stored information is being widely seen among the small and medium sized businesses (SMBs). An efficient way of business performance is observed with the digitalization process. At the same time, there has been a rise of cyber criminals involved in penetration of data systems of small businesses. This results in massive financial and retail security fraud. An increased rate of cybercrime in online banking processes of small businesses has become a major concern. Many banks have failed in taking corrective action to protect the customers of SMBs. This is resulting in a situation of frequent changing of the banks by small businesses. According to a survey conducted in 2010 by the Association of Certified Fraud Examiners, it was found that instances of fraud are mostly being committed in small business rather than in large firms. The study reported that 31% of the frauds were occurring in companies having less than 100 employees. It was followed by 23%, in companies with less than 999 employees and 21%, in the companies having more than 10,000 employees. Therefore, small businesses in U.S are suffering from heavy losses than large companies. The survey revealed that a median loss of $150,000 was caused by the fraudulent attacks in small businesses having less than 100 employees. However, it was $84,000 in businesses with payrolls exceeding 10,000. According to the officials of the association, some tips to be followed by SMBs to prevent the attacks are: • Hire different employees for delegating the responsibility of accounts receivables and company’s disbursements. • Hire an outside accountant, at least once a year to review all your business financial records - helps in having a fresh and unbiased review of the status of the firm. • Notice should be kept on the employees who are involved in dealing the finance issues of the company. • Proper checking of receipts for deposits on both federal and state taxes is recommended. • An anonymous employee group should be installed that includes some employees and managers for participation in inspection procedures. A survey was conducted on more than 500 owners of SMBs in the U.S. by the Ponemon Institute and Guardian Analytics. It revealed that 55% of the businesses experienced fraud in the past twelve months before the conduction of the survey. It was found that 80% of the banks failed in catching the frauds before the transfer of the funds out of the institution. Recovery of full assets was failed by banks in 87% of the fraud attacks. The study also reported that 57% of the respondents who faced the attacks were not fully compensated by the banks. No compensation for the losses was provided for 26% of them. Any business is at risk because of frauds. Moreover, small businesses are easily prone to fraud attacks. Destroying files, networks, websites and bypassing the passwords are prominent in many businesses. These attacks have a negative effect on the growth of the businesses. So, small businesses should be aware of the cybercrime issues and be secure using the simple tips given above.