How to protect your business from scams in uncertain times

One of the easiest ways to lose money as a business is at the hand of a scam artist or case of fraud. Normally, fraud is a case of civil crime. It’s a case of malicious intent of one person against a person. Occasionally, however, fraud or scams can amount to a criminal charge, particularly if the business is facing a loss. 

To protect yourself against scams in uncertain times, here are a few tips to consider: 


  1. Avoid Employment Fraud

If an applicant puts or omits information on their application (such as convictions or felony charges), it constitutes fraud. This also highlights the importance of running a background check on every potential candidate (after interviewing them).


By running a check, you’ll be able to confirm that every individual has been honest and clear with their application – from their residential address to a criminal past. For security and liability reasons, it’s always a wise investment to carefully review any potential employee before hiring to avoid any potential problems down the road.

  1. Prevent unqualified labor


When you’re starting a retail location, renovations are typically completed before opening. For a few small businesses, getting left without completed projects (or worse, dealing with an unsafe environment due to improper work) opens a vulnerability and risk to your customer base.


After all, allowing customers into your location while renovations are occurring is risky enough without unskilled labor. That’s why it’s critical to review any contractor for skill, education, certification, and qualifications. 


Always ask a contractor for proof of insurance before the contract begins and ensure validity by contacting the number of the form. If a contractor fails to produce proper documentation to support their qualifications or insurance, find a new provider. 



  1. Subcontract Projects Carefully

Subcontracting occurs in almost every industry, particularly in the service sector. If you’re looking to hire an overseas provider (which can typically reduce labor costs), set multiple interviews with an individual before committing to one. Talk to them about a variety of topics, from business to their personal interests, to find out their level of communication. 


Also, make sure that any services performed will be formalized in writing; hours, pay, reimbursement, vacation pay, insurance, and other key areas will need to be discussed prior to signing a contract. Finally, try to ask for a trial period before committing to a long-term contract. 


  1. Have a lawyer review any contracts

As much as we believe we know our business better than anyone else, a lawyer understands contract terminology even better. Contacts are legal documents that hold accountability in court; failing to safeguard your business against any loopholes or questionable terminology puts your company at risk of lawsuits, litigation, and costly oversight.

Likewise, it’s always a wise decision to have a lawyer check through any subcontractor agreements before signing on. Subcontractors will typically arrange their own business agreements based on their performance, including quotes, terminology, fees, and cancelation policies. 

Most contracts will also include a stipulation about the district or area for any litigation issues – often the hometown of the contractor. This means hiring an overseas provider may result in resolving any issues overseas. For many businesses, the process and expense are too high, making it an unrecoverable debt. 



  1. Discover what you can about any business contacts online

Carefully review any individual or company you’re considering for business purposes before hiring them on. A quick background check or search can provide a wealth of information about their online reputation and image. Negative reviews shouldn’t necessarily be a dealbreaker for your potential hire, but ensure you ask them about the experience to see what happened. 


A professional business will likely understand the issue for what it was – a simple misunderstanding or oversight. If the company blames or attacks the individual for the experience, consider canceling the contract. 


Although these are just four ways to prevent your business from being at risk of scams, unfortunate circumstances arise all the time. Taking the time to have your employees well-vetted, contracts overseen by a professional, and any contract work investigate before hiring can help you minimize those risks. It’s always easier to protect your business against fraud or scams, then it is to try and recoup the money, time, or investment after the fact.