How Do I Prevent Fraud?

The best way to prevent fraud in both personal and organizational finances is to develop processes that protect sensitive information, enforce accountability, and consistently review financial records. By adhering to these processes and tweaking them when necessary, you can prevent individuals from accessing sensitive information that they can use to steal money or otherwise use your identity or resources for inappropriate purposes. In addition, by constantly evaluating records, you can prevent or at least discontinue fraud by noting irregularities and taking action.


In order to prevent fraud in your personal finances, it is a good idea to carefully protect all of your personal identity and financial information. This includes any type of government identity number that you've been assigned, such as a United States Social Security number, credit card information, and both bank and investment account numbers. If you receive communications from your bank or credit card companies in the mail, it is very important that you safely store these documents or destroy them in a way that makes it impossible for an identity thief to obtain sensitive information from them. If you are using a credit or debit card in public, keep your finger over the card number at all times and do not provide credit card or personal information to individuals who call you on the phone or contact you via e-mail. In business, it is important to develop an information security policy that permits only certain employees access to the financial information of both the company as well as the company's customers.

One of the best ways to prevent fraud is to rigorously and regularly scrutinize financial documentation. Many people, including business owners, fail to look over their credit card or bank statements and may not notice unauthorized charges. Many individuals who commit fraud begin by stealing or charging small amounts of money before taking larger sums. By looking for suspicious charges, you may be able to nip fraud in the bud and prevent more significant losses in the future. You also be better able to catch an individual who is committing the crime and either remove him from your organization or bring him to the attention of law enforcement.

Accountability and transparency are also crucial in your efforts to prevent fraud. In organizations, even those employees who have authorization to spend money should be required to submit documentation of their spending to a financial officer and, in some cases, have their spending approved. Such measures can reduce temptation for employees and simply make it more difficult for the unscrupulous to successfully commit fraud.



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