5 Industries Most Likely to be Affected by Frauds

Fraud impacts many businesses both old and new. It’s important that you’re aware as a business, what tactics and methods are out there being used by scammers to exploit businesses in 2022.

Certain industries are more susceptible to these threats perhaps due to outdated software in place to simply not educating their staff well enough to prevent fraud from occurring. With privacy policies coming into law within many countries now, falling victim to fraud can cause significant damage to a business when you have hold of other people’s sensitive information.

What industries are most likely to be affected and what types of fraud exist nowadays? Within this guide, you’re sure to find all of the relevant industries that are most likely to fall victim to fraud, as well as preventative methods to avoid getting caught out. As a business, it’s something that you want to avoid where possible.

Top 5 industries most likely affected by fraud

Many industries are susceptible to fraud but there are certain industries in particular that are more likely to be affected due to the nature of the business. Here are the top five industries that are affected most by fraud and are handy to know if your business is one of them.

1. Finance and insurance services

One of the most common places to find business fraud is in financial and insurance services. An obvious one is because it’s naturally the hub for the world’s finances and therefore the most valuable for those who are looking to hack a business.

From stockbrokers to investment advisers and wealth management firms, all these are targeted by scammers and have done for decades. They’re also more of a target due to the growth of the internet and having more digital imprints not just as a business but by those customers who choose to operate online too.

Finance and insurance services

For banks, it can be a dangerous place to navigate with so many bank holders using online banking and automated services to do their daily transactions, etc. It’s therefore important to have fraud detection and prevention for banks in the form of high-security software.

2. Cryptocurrency and NFTs

Over the years, cryptocurrency and NFTs have become significant investments for businesses and individual investors. Whether you’ve invested a couple of dollars or thousands, it’s all contributed to the rise in popularity of these digital currencies.

However, with this growing popularity, comes a lot of dangers – especially as it’s a currency that’s decentralized. For those not aware of this type of investment, cryptocurrencies differ from traditional currencies issues from the bank for example. They’re not controlled by any one institution.

Hackers are taking advantage of this industry because many cryptocurrencies and NFT owners have digital wallets that store this currency. These wallets can be easily exploited and stolen if you’re not being careful with your security.

3. Manufacturing and engineering

The manufacturing and engineering industry is one that can fall victim to a lot of fraud due to the digital approach they’ve needed to take since the pandemic.

Within an industry that relies on machine production, scammers have found an opportunity to infiltrate a company’s information. Fraud within the workplace could only really be achieved in this industry by taking something from the factory floor. However, within a digital environment, data theft and ransomware attacks are rife within this manufacturing industry.

According to the ACFE, they estimate the annual cost of fraud globally is around $4.7 trillion, with a lot of that being costly to this industry in particular.

4.  Energy

The energy industry is one that wasn’t particularly targeted by scammers prior to the pandemic but since then, like the manufacturing industry, it too has fallen victim to data theft.

A lot of these businesses within the energy industry don’t necessarily have the knowledge and experience to defend themselves against online threats. With certain industries like the financial sector, who’ve had to put cybertheft and attacks at the forefront of their attention, energy organizations are having to quickly do the same when operating online.

5.  Retail

The retail industry is for the most part, online nowadays and that has been a significant change as more eCommerce businesses have popped up. With more retailers who are online-based solely, they’ve become targets by scammers who are looking to attack a very rich industry.

Retail sales for the US alone were $5,570.4 billion in 2020 and have only likely grown since the pandemic has reigned on. Server access and ransomware have been two popular methods in attacking this industry in particular.

What types of business frauds exist?

There are plenty of fraud types that you should watch out for as a business, especially within this digital age where most businesses have an online presence. With the median loss for owners and executives of business fraud being around $850,000, it’s a financial loss that can be difficult to recover from.

By understanding what fraud types exist, you’re more likely to be able to prevent it as a business by having the awareness of what’s out there.

Employee fraud

Your employees tend to be the most vulnerable to fraud from outsiders but they can also be the individuals that commit fraud from within the company. This type of fraud usually occurs within the financial department of the organization as they have access to the accounts for the most part. The higher the position, the closer they are to the money.

With this fraud, it starts off minimal and will always likely be smaller amounts so that it doesn’t get noticed by anyone else.

Digital fraud

Known as internet fraud, digital fraud is one that anyone within the organization can easily fall victim to. From phishing attacks via emails to malware that’s targeted through servers and the internet of things, hackers are becoming more methodical in their abilities to scam businesses and individuals.

Another aspect of digital fraud is CEO fraud. This is where hackers will target some of the weakest links within the company, especially when using the influence of a CEO. For example, an email may get sent, appearing to be the CEO asking for a large sum of money in order to ‘close a deal’ or to get them out of a sticky situation that must be kept secret.

In this case, the best thing to do is contact the superiors or CEO directly to confirm the validity of the email.

Invoice fraud

Invoice fraud is where paper invoices are intercepted and the account number is changed. This has gone on for many years now but is now done digitally too. The hacker will infiltrate the supplier’s information system in order to intercept the invoices being sent. Digital invoices are always harder to intercept so when sending invoices, it’s always best to go through this route.

Credit card fraud

Finally, most businesses have access to a business credit card and therefore are more vulnerable when it comes to being targeted by credit card fraud.

Credit card fraud is when the fraudster is able to gain access to your credit card information in order to make fraudulent payments online and in person in some cases. Particularly when making payments online and on certain untrustworthy sites, can lead to this type of fraud.

How to prevent fraud for your business

Preventing business fraud for your own company is going to be better than having to do damage control and recovery from falling victim. Here are a few ways to help prevent fraud from occurring in your business.

Train your employees

As we’ve mentioned, your employees are the most vulnerable to falling victim to fraud or a scam that could directly impact the business as a whole. With that being said, training your employees is crucial to helping prevent scams from occurring through human error or naivety when it comes to being presented with seemingly legitimate correspondence.

Train your employees

Monthly or yearly training courses are certainly worth considering depending on how vulnerable your business is to cyber threats and of course, the industry your business is in.

Stay up-to-date with the latest fraud attempts

With fraudsters chopping and changing their methods to catch more victims out, it’s important to be aware of what latest fraud attempts are taking place within your industry and in general. As technology advances and evolves, so too do the efforts of scammers who are trying to catch businesses in a compromising position.

Use platforms like USA Gov or you’re relevant government territory to understand what threats are present currently and in the future.

Identify and address areas in business where you’re vulnerable

Finally, take scope of your business and use an IT team to help understand where your vulnerable areas are within your business network online. A security team for in-person scenarios is also worth having to see where in your company building, there could be potential problems.

Avoid fraud and keep an eye on fraudsters in 2022

As we continue to go through 2022 and beyond, it’s good to keep your focus on fraudulent activities and make sure you do everything you can to avoid it from happening to your business!

Author Bio: Natalie RedmanQ

Natalie Redman

Freelance writer for many clients across multiple industries. Natalie has two years of copywriting experience. Natalie has a wide range of experience copywriting for web pages for businesses across many industries. She’s also an owner of two blog websites and a Youtube content creator.