How to Protect your Business from White Collar Crime

by gclatworthy on December 31, 2012

  • SumoMe

According to the National Public Survey on White Collar Crime, it costs society between $300 billion and $600 billion annually. From 2005 to 2007, reported victimization soared by 23 percent. Nearly a quarter of households reported that at least one member was a victim of a white-collar crime in 2010. Consumers are the most common target for these types of criminals. However, credit card fraud comprises nearly 40 percent of all white-collar crime. A business that does not protect itself against credit card fraud, check fraud, or identity theft exposes itself to potentially great financial loss.


Since the most common type of white-collar crime is credit card fraud, it is only natural for businesses to take preventative action to authenticate users. Credit card fraud normally entails a user buying an item with someone else’s information and posing as that person. When the victim discovers the charge, the credit card company performs a chargeback and the merchant is out of the money. Authentication procedures can vary depending upon which company is processing the payment or providing the card.

Online credit card payment gateways permit businesses to authenticate users. Most credit card fraud conducted online involves the criminal buying an item and having it shipped to an address near them. This will almost never be the victim’s billing address. Many businesses will temporarily hold orders from new customers who are shipping items to an address that is not the listed for billing. The business manually verifies the details with the credit card company that will usually contact the card owner with the information that it has on file. This provides greater security for the business owner. After a new customer’s account is verified, the customer may buy products as normal.

Authentication requirements should be placed on higher value items purchased by new customers that are being shipped to a location that is not the credit card holder’s address. Attorneys who handle white collar crime cases, such as the Law Offices of Steve E. Kellis, recommend business owners should look at the customer’s I.P. address when authenticating an account. If the new customer has an I.P. address away from the billing address, then fraud may be more likely.

In-store carding is harder to prevent initially. If the victim lives within the area in which the card is swiped, the credit card company will often allow a charge to go through. Most credit card companies will only temporarily halt activity on a credit account if a card with a high limit and historically low balance is suddenly incurring thousands in new charges. Many thieves can select the victim’s state and sometimes the city when purchasing stolen identification. As a result, in-store carders will rarely conflict with jurisdictional red flags. The best approach to avoid in-store carding is to train tellers to check identification for purchases over a small base amount. This is already usually required by the merchant agreement, but many cashiers do not check.

 Transactional Monitoring

Preventing a fraudulent transaction may not always be possible. However, businesses that are able to provide law enforcement officers with copious amounts of detail regarding the offender are able to increase the likelihood that the offender will be caught. Not all police departments take white-collar crime seriously, but some do. Brick and mortar business owners should ensure that surveillance cameras capture customers entering and leaving the store and that there are cameras covering the parking lot. This will aid law enforcement officers in their investigation.

Internet businesses should ensure that I.P. addresses and shipping addresses are logged. Some criminals are erroneously convinced that police officers do not take white-collar crime seriously and may conduct their activities from home and have stolen items shipped directly to them. Additionally, businesses can install cookies on their customers’ computers. If an offender uses a proxy and a drop address, tracking the offender may be difficult. If the business uses a tracking cookie to tie transactions together, the business may catch the offender using their real details for a normal transaction on the business’ web site.

  Check and Money Order Authentication

Many criminals will forge checks and money orders in an attempt to pay for items. When the business attempts to deposit the check or money order, the fraud may be discovered. In some cases, it may be deposited into the business’ account only to be discovered as fraudulent later. However, many legitimate customers will pay for items with checks or money orders. It is important to determine whether a check or money order is valid prior to accepting it.

Validating a money order depends upon where it originated. To authenticate U.S. Postal Service money orders, businesses need only hold them up to the light. U.S. Postal Service money orders have a watermark of Benjamin Franklin and a band near the watermark that is visible when transmitting light through the money order.

Additionally, the dollar amount of the money order should be crisp and clear; if the amount is smudged, the amount on the money order may have been changed.

Authenticating a check can be more difficult. Most checks do not contain watermarks and check fraud perpetrators often have legitimate checks that have been stolen. Check authentication will usually require an electronic check processing system that records the account and routing information. For businesses that accept checks, these electronic verifications systems are well worth the money.

 Employee Theft and Fraud

A Maryland bank teller recently pled guilty to siphoning off tens of thousands of dollars in customer funds. This is unsettlingly common. A large percentage of crime that occurs at businesses will involve employees being perpetrators. Most low-ranking employees at businesses or in call centers receive low pay while simultaneously being entrusted with large volumes of financial information or handling millions of dollars worth of inventory. These jobs also involve high turnover and are easy for criminals to obtain. Businesses owners must keep one eye on the customers and one eye on their employees.

For a contracting business, employee theft comes in several forms. Employees will often steal items and take them out with the trash for later pickup; businesses should ensure that their surveillance cameras cover any garbage cans or bins adjacent to the building. Cashiers who pocket the customers’ cash can also victimize businesses; having surveillance cameras cover the work area as well as the customer area is a prudent idea to dissuade employee thefts. For virtual businesses, tracking employee logins and traffic can help businesses determine the source of a breach of consumer information.

Criminals will use a variety of techniques to victimize businesses. Some of them will target the money, some the products, and others the financial information that they process and store. Business owners must be prepared to face all of these threats. When it comes to unlawful activities, the pen really is mightier than the sword.

Writer and mother Molly Pearce goes the extra mile to protect her free-lance art business from any type of fraud. Attorney’s who handle a majority of white collar crime cases, such as the Law Offices of Steve E. Kellis, recommend having procedure set up to monitor all employee and customer transactions for white collar crime and for businesses to maintain regular legal counsel to advise them in instances where this type of issue arises.

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