Last Updated: 05.04.2020

The bottom line is this, the easiest way to stop fraud, theft, and waste from occurring in a business (of any size) is to prevent it from happening in the first place. The old saying goes, “an ounce of prevention is worth a pound of cure.” That is definitely true where fraud and theft is concerned.  Don’t think as a small business owner that taking preventative steps isn’t worth your time, it is.  According to a recent study by ACFE, businesses lose on average 5% of their gross revenue to fraud, theft, and waste.   In tough economic times, that is enough margin to drive many small businesses out of business. With all that being said, this will be a series of reoccurring blog posts on some simple and quick tips you, as a small business owner, can do to prevent fraud in the first place.Small Business Fraud

Fraud Prevention Tips – Step one, conduct a better job interview

Many people, including HR managers, think that job interviews are a “get to know you process.”  Or that job interviews are a good way to see if the person “fits” with your company culture.  Those things might be true, but it’s also an opportunity to prevent the hiring of a future fraudster into your business. Consider adding a few psychological (or behavior-based) interview questions to your interview. Here are a few very short and simple ones:

  1. A $50 bill is on the floor, what do you do?
  2. Do you have a Facebook page or Twitter account? (you cannot ask for their passwords, according to a recent Court of Appeals case, that’s an invasion of privacy)
  3. Do you mind if we run a background check?

In all of these situations, you aren’t looking for a specific answer, but rather the reaction of the interviewee.  If they become fidgety and evasive, perhaps it’s time to move onto a different candidate.

Maryland Small Business Fraud Prevention tips: Step two, conduct a free background check

With the advent of the internet and the digitization of many records, a simple and free background check is just a few clicks away.  Here are some links to online records for the State of Maryland that (if used properly) can help you learn about the background of a candidate and not break your bank.

When using any of these tools, just be aware that all the records have the possibility of being faulty and you must understand how to correctly read them before rushing to judgment on a particular candidate (particularly court records).  If those free services fail, you can always try a paid service (like the one we subscribe to – TLO).  Our in-house private investigator charges $20 per search and it provides substantially more information about a person’s background.

Maryland Small Business Fraud Prevention tips: the bottom line

If you tighten up your front end controls, it could save you thousands later on, so make those interviews count because you never know who the next thief could be.  If you find yourself victimized, be sure to contact your favorite ENlawyers.

Next week: HR manuals and why informed consent can save you thousands.