Five Ways to Help Employees Spot and Stop Business Fraud

By Mark Valentino, Head of Business Banking at Citizens

Clear procedures and regular training help employees recognize potential fraud and know how to respond quickly to protect against business fraud. Common employee actions that may expose small and midsize businesses to fraud include acting too quickly on urgent requests, using weak or repeated passwords, skipping payment verification steps, making exceptions to established procedures and waiting to report something that seems wrong.

Five Ways to Help Employees Spot and Stop Business Fraud

Employees play an essential role in small and midsize businesses, but their everyday tasks may also expose a business to financial fraud and cybersecurity threats. That’s because fraud attempts often come through business emails, text messages, phone calls and other communications that look legitimate. 57% of businesses with $5M+ in annual revenue say employee actions have put their business at cybersecurity risk or contributed to a cybersecurity incident.¹

Training employees to spot scams and follow processes that provide protection is an important tool for addressing this risk. 44% of all $5M+ businesses² are training employees to recognize cybersecurity threats using a tool with AI-powered capabilities.

In my work with businesses, I see how easily everyday employee actions may create opportunities for financial fraud and how training and the right company processes can help businesses address these risks.

1. Responding too quickly

Scammers often succeed by convincing employees to act quickly. They may pose as a manager who needs something immediately, a vendor requesting payment or a colleague asking for urgent access to a document. When criminals create this sense of urgency, employees may respond without scrutinizing the request or following normal procedures. AI has also made fraud attempts more convincing by creating communications that look like they come from legitimate business contacts. 25% of businesses with $5M+ in annual revenue say employees clicking malicious links, opening infected attachments or responding to phishing or other scams has put their business at risk.³

Employee training should cover common business scams and cybersecurity threats. Employees should know they have permission to take extra care when asked for money, login credentials, sensitive information or changes to established processes.

2. Using weak or repeated passwords

Passwords help protect email, financial systems and other business accounts, but only if they are strong. When employees reuse a password across multiple accounts, it increases the risk that stolen credentials from one account could provide access to another. 25% of businesses with $5M+ in annual revenue say that employees using weak or reused passwords or sharing login credentials has put their business at risk.⁴ Sharing login credentials also makes it harder to control who has access to an account and determine who used it.

Training should reinforce the importance of using strong, unique passwords and keeping login credentials private. Employees should also understand that protecting their login information helps protect more than a single account because compromised credentials may give criminals access to business communications, financial information or other systems.

3. Skipping verification when money is involved

Employees responsible for invoices, payments and vendor relationships may be attractive targets because they have access to business funds.

A fraudulent request does not always look unusual. An employee may receive an email that appears to come from a familiar vendor saying the vendor has changed banks and asking that future payments be sent to a new account. Or an invoice may look legitimate but include fraudulent payment instructions. Acting without independently verifying the information could send money to a criminal. 16% of businesses with $5M+ in annual revenue say employees have approved fraudulent payments or changes to payment information without adequate verification.⁵

Training should teach employees to verify changes to payment information through a known contact and established communication channel. Training and clear procedures also reduce the need for employees to decide whether a request "looks real." Instead, they know which verification steps to follow before acting.

4. Making exceptions to procedures

Employees sometimes make exceptions because they want to be helpful. A senior employee may ask them to skip an approval, or a customer or vendor may ask them to bypass a normal step. Criminals may take advantage of this willingness to accommodate a request.

Training should make clear that employees are expected to follow verification and approval procedures regardless of who makes the request. No exceptions. Business leaders can reinforce that message by following the same rules themselves.

5. Waiting to report something suspicious

An employee may realize something is wrong only after responding to a message, accommodating a request or providing information. Fear of being blamed or uncertainty about what happened may cause them to wait before speaking up. That delay may give a criminal more time to use stolen login information, access business accounts or attempt another transaction.

Training should emphasize the importance of reporting concerns immediately, even when employees aren’t sure fraud occurred. Employees should know how to raise a concern and feel comfortable doing so.

Empowering employees to help prevent financial fraud is an important part of protecting the business.

At-a-Glance: How to Help Employees Protect Your Business

Action: Acting quickly on an urgent request
Better practice: Pause and scrutinize requests involving money, sensitive information or account access.

Action: Using weak, repeated or shared passwords
Better practice: Use strong, unique passwords and follow account access requirements.

Action: Changing payment information based on a message
Better practice: Independently confirm new payment instructions using a known contact.

Action: Making exceptions to established procedures
Better practice: Follow required steps regardless of who makes the request.

Action: Waiting to report something suspicious
Better practice: Immediately report anything concerning through established reporting channels.

Key elements of fraud prevention training for employees

I encourage businesses to provide ongoing training that reflects employees’ roles and keeps pace with changing fraud tactics.

• Make it relevant: Focus on scams employees may encounter based on their roles and access.
• Reinforce it regularly: Revisit key practices as fraud tactics or business processes change.
• Make it practical: Use realistic examples to practice how to respond to potential fraud.
• Check understanding: Use quizzes or other checks to identify topics that need reinforcement.

Make employees part of the defense

Your employees do not need to be cybersecurity experts to help prevent business financial fraud. They need to know how to recognize scams, follow established procedures and feel comfortable raising a concern when something seems wrong. Regular training helps reinforce these habits.

Check out these business fraud resources or schedule time with a Citizens Business Banker to discuss ways you can protect against financial fraud.

Explore Fraud Resources

Frequently asked questions

Which employees should receive fraud prevention training?

All employees should receive fraud prevention training, with additional guidance based on their roles and access. Employees who handle payments, financial accounts, sensitive information or vendor relationships may need more specialized training.

How often should employees receive fraud prevention training?

Training should be ongoing rather than a one-time exercise. Reinforce key practices as fraud tactics, employee responsibilities or business processes change.

How can businesses make fraud prevention procedures easier for employees to follow?

Keep procedures clear and specific, particularly for payments, account changes and requests for sensitive information. Employees should know which steps to follow and who to contact with questions.