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The Inside Scoop on Fraud Prevention

May 30, 2010 | In: Business

Fraud – it’s out of control.  Each year, U.S. companies lose more than $600 billion to fraud, with counterfeiting and written document fraud making up more than two-thirds of that, according to the world’s largest fraud prevention organization, the Association of Certified Fraud Examiners.

Business documents, financial documents, birth certificates, identification cards, licenses, motor vehicle titles, prescriptions, college transcripts, tickets and passes for events – any document of value is at risk. With law enforcement focused on violent crime and homeland security, however, there are limited government resources to address the problem of fraud prevention. The challenge of reducing fraud and its associated losses falls primarily on the organization that owns the documents.

If you’ve followed the advice of experts, you’ve integrated multiple security features into essential documents and standardized their design to make them readily recognizable to those who use and accept them.  However, it’s important to recognize that the physical features of your documents are only half of an efficient fraud defense.  It’s vital that you also establish secure document management for controlling document issuance and handling.

Consider these steps for more secure document management:

1. Securely store and audit important documents.  Defend your documents from theft by securing stock in secured rooms at all times, and by recording and auditing document control numbers. Limit access to materials at all stages: production, shipping, receiving, storage and use. Monitor your document production facility and audit regularly. Be sure incoming shipments of checks, prescription pads or other valuable documents are not identified on the shipping labels or containers.

2. Separate financial responsibilities.  In matters of money, make sure at least two separate groups of people are responsible for payment and reconciliation.

3. Use secure output-management systems to provide controls and audits to help prevent item theft or unauthorized use. The system should record every item issued and identify the authorizing individual at issuance.  Ideally, data from the issued documents should be forwarded to downstream authentication systems.

4. Use verification validation devices.  Positive Pay and image-comparison services, as well as bar codes and data encryption solutions, help ensure that the information matches up. Identity security or biometric solutions such as fingerprint, retina, iris and face recognition, take secure documents to the next level.

5. Establish limits & reconciliation systems.   Set up limits on check amounts being disbursed; require special approval for higher amounts. Compare purchase orders to packing slips, and inventories to disbursements of printed statements. Secure stock for checks and other vital documents. Reconcile all transfers.

6. Know your people.   Review permanent and temporary hiring procedures to help assure you’re attracting reliable people you can trust to manage your vital business documents.  Background checks are an important part of this process.  Then provide your staff with proper credentials that enable you to validate who they say they are.

7. Finally, select reliable and well-known document management providers.  Thoroughly evaluate potential vendors. Determine: Do they have secure facilities?  Are their operators trained to follow security protocols?  Do they have controls in place to prevent fraudulent orders?  Do they have the expertise to anticipate new forms of assault and develop new defenses? Do they understand the needs of your organization and the possible ways your documents might be compromised?

Fraud is an ongoing challenge to meet, but if you follow these seven steps, you will be well on the way to thorough fraud prevention.



4 Responses to The Inside Scoop on Fraud Prevention


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