Through the latest webinar, Unmasking Fraud in Not-for-Profits: Five Key Schemes and Five Preventive Steps, we engaged with a whole lot of accounting and finance professionals from not-for-profit entities throughout the nation. People shared their ideas and views on the fraudulent exercise they’re seeing of their organizations and strategies to mitigate danger.

Beneath are the highest 4 fraud classes that emerged—phishing schemes, bank card fraud, examine fraud and money theft—together with key insights to assist shield your group.

Risk #1: Phishing Scams and Electronic mail Fraud

In lots of phishing schemes, hackers both impersonate an e mail account or take over a trusted e mail account, utilizing a number of strategies to steal funds from organizations. The commonest techniques embody:

• Reward Card Scams: These scams usually contain social engineering, whereby a fraudster poses as a senior chief and makes an attempt to trick your staff into handing over delicate data with out having to crack your safety techniques. The hacker requests somebody to buy present playing cards for patrons or colleagues after which asks for the numbers on the again of the playing cards, together with the PINs. As soon as they’ve this data, they shortly use the present playing cards on-line, leaving the group with the bills.
• Faux Vendor Invoices: The hacker impersonates a vendor and sends a fraudulent bill for cost or makes an attempt to reroute common automated clearing home (ACH) funds. They use a rip-off method known as typosquatting, the place they register domains that look just like authentic ones however comprise slight variations, corresponding to bankofarnerica.com (utilizing “rn” as a substitute of “m”), to deceive staff.
• Rerouting of Buyer Proceeds: After having access to a company’s e mail account, normally somebody within the accounting division, the hacker sends invoices to prospects. These invoices seem authentic however embody altered cost directions directing funds to the hacker’s checking account.

The right way to Defend Your Group from Phishing Scams

Listed here are a number of methods you’ll be able to assist your group keep away from falling for phishing scams.

• Implement safety consciousness coaching to assist staff acknowledge phishing makes an attempt and tried fraud.
• Use IT safety measures like Area-based Message Authentication, Reporting and Conformance (DMARC) and DomainKeys Recognized Mail (DKIM) e mail authentication processes or e mail filtering. Require multi-factor authentication on all accounts.
• Rent a cybersecurity specialist to conduct penetration testing, also referred to as moral hacking. The specialist will try and hack into a company’s system to determine weaknesses in safety protocols.
• Prohibit private e mail entry on firm gadgets to scale back publicity to malware and phishing assaults.
• Encourage staff to pause and confirm pressing monetary requests—scammers create urgency to control victims.

Risk #2: Credit score Card Fraud

Bank cards are a frequent concern for not-for-profits. The commonest sorts of fraud embody:

• Unauthorized private purchases: A certified worker makes use of a company-issued bank card for private gadgets, both unintentionally or deliberately.
• Compromised accounts: Hackers acquire an organization bank card’s data and use it for unauthorized purchases on-line or in individual with a cloned bank card.

The right way to Defend Your Group from Credit score Card Fraud

Listed here are a number of methods to guard your group from unintended or fraudulent bank card use.

• Restrict the variety of firm bank cards and problem them solely to staff who want them for his or her jobs. Following a normal expense reimbursement coverage could also be a safer course of.
• Set inside insurance policies proscribing the quantity staff can spend on a bank card with out prior approval from a superior. Work together with your monetary establishment to set spending limits and service provider restrictions.
• Assessment bank card statements month-to-month and require staff to submit receipts or invoices for all purchases. Statements alone could not present sufficient element to differentiate enterprise from private bills.
• Set up clear bank card utilization insurance policies and revoke playing cards from staff who violate them. Small violations can escalate into fraud.

Risk #3: Verify Fraud and Theft

Though paper checks are lowering in recognition, examine theft and fraud stay a risk to organizations. Nevertheless, your group can take steps to scale back the danger.

The right way to Defend Your Group from Verify Fraud

With a number of modifications to your processes, you’ll be able to lower the possibilities of your group experiencing examine fraud.

• Use Optimistic Pay: This function, provided by most banks, matches issued checks with these checks being introduced for cost. If particulars don’t match, the financial institution rejects the examine. Seek the advice of together with your financial institution to find out which examine traits they’ll confirm (e.g., payee, quantity, date) and the particular course of they use.
• Scale back reliance on bodily checks and think about ACH or an automated payment system that hides account particulars from distributors.
• Carry out well timed financial institution reconciliations to detect fraud early. Assign an worker with out check-signing authority to deal with financial institution reconciliations.
• Require twin signatures on checks above a certain quantity. Whereas banks could not implement this requirement, it will increase each actual and perceived fraud detection.
• Observe U.S. Postal Inspector recommendations for mailing checks.
  1. Drop checks off on the publish workplace.
  2. Hand envelopes containing checks on to a mail service.
  3. Drop checks in a blue United States Postal Service (USPS) assortment field earlier than the final pickup of the day to forestall in a single day theft.
• Use gel ink pens, that are extra immune to examine washing.
• Cancel and reissue stale checks. When required, escheat uncashed checks to the state.

Risk #4: Money Theft

With in-person occasions and volunteers, theft of petty money or donations and register skimming are frequent points for not-for-profits.

The right way to Defend Your Group from Money Theft

Listed here are a number of straightforward steps your group can take to restrict the alternatives for money theft.

• Reduce the variety of money assortment containers and places.
• Guarantee money containers are safe and, if attainable, inside view of safety cameras. It will help in investigating any theft allegations and reduce the danger of theft by growing the notion of detection.
• Conduct frequent money counts and reconcile to money register listings to detect discrepancies early.
• Make sure that when gathering money donations, there’s at all times multiple worker current.

Key Takeaways

Whereas not-for-profits function with a mission-driven focus, they aren’t proof against fraud dangers. Being proactive is the perfect protection and there are easy steps organizations can take right this moment. In response to the Affiliation of Licensed Fraud Examiner’s Report to the Nations, the longer the fraud goes undetected, the higher the monetary loss. If stopping fraud is just not attainable, detecting it early is crucial. By implementing these safeguards, your group can cut back vulnerabilities and be sure that monetary sources stay devoted to your mission.