How To Protect Your Business From Fraud In Canada

Fraud happens. Know how to protect your business from crime

Hook, line and sinker. It’s hard to believe that phishing scams started a quarter century ago. That is to say, in 1995 online scams were just emerging. However, by the mid-2000’s, the term ‘phishing’ – and it’s costly impact on businesses – became widely known.

According to by “2001, phishers turned their attention to online payment systems. Although the first attack, which was on E-Gold in June 2001, was not considered to be successful, it planted an important seed. In late 2003, phishers registered dozens of domains that looked like legitimate sites like eBay and PayPal if you weren’t paying attention. They used email worm programs to send out spoofed emails to PayPal customers. Those customers were led to spoofed sites and asked to update their credit card details and other identifying information.”1

Related Matters: How Phish-Prone Are You? A quiz created by

As a result, businesses around the world are continuing to keep a watchful eye on new and emerging e-fraud scams. Thankfully, the business insurance Canada marketplace is keeping pace with products that respond to fraud and crime.

Keep reading to learn more about how to protect your business from fraud in Canada with both coverages as well as risk management best practices.

Crime insurance can help protect your business from fraud

It doesn’t matter the size of your organization; it can be targeted by a fraudster. And the person who’s targeting your company may be on the inside. Theft may be old-school and opportunistic. For example, cash that’s stolen from a retail till. Or the scheme may originate from the outside. For instance, as part of a long-term skimming scheme, fraudulent e-transfers are made.

These scenarios and more are why crime insurance is so vitally important. Protecting your business from fraud is specifically why crime coverage is a must-have for Canadian businesses. Here are a few potential loss scenarios that a crime policy can cover:

  • Computer Fraud – A third party uses a computer network to unlawfully take or fraudulently induce the transfer of money, securities and/or property.
  • Credit Card Fraud – A third party forges or alters any written instruction that’s required in connection with a credit card issued to an insured, employee or partner.
  • Funds Transfer Fraud – A third party issues fraudulent instructions to a financial institution. The instructions direct the bank to transfer, pay or deliver money or securities from the insured’s bank account without their knowledge or consent.

In addition to these potential fraud situations, crime insurance can also cover many other loss situations.

Fraud risk management – avoiding the many COVID-19 scams

According to CIBC, as recently as 2019, more than 80% of organizations reported a payment fraud attack. These attacks came in many forms. For example, a compromised business email (61%), an outside individual (forged cheques, stolen card – 58%) and third-party or outsourcer (vendor, professional services – 28%).2

CIBC also notes that during COVID-19, phishing, fraudulent scams and other criminal activities are on the rise. As a result, a CIBD Fraud Prevention Tip Sheet provides some specific risk management guidance you can use to protect your business from fraud.

Scenarios that fraudsters are using during COVID-19 are specifically preying upon the fears of Canadians. For instance,

  • “Using seemingly legitimate COVID-19 related websites or links to introduce malware to your device
  • Recommending you download COVID-19 related apps or software through a website or email
  • Recommending medical advice and offering fake products claiming to treat and prevent COVID-19
  • Telephoning you and claiming to be from CIBC and requesting your banking information
  • [Or] a health or government agency, like Health Canada, World Health Organization or a local hospital, and requesting your personal information (unless you’ve been tested)
  • Impersonating essential services such asa utility company or service provider to ask for funds due to a late or unexpected charge
  • [Or] The CRA or RCMP and demanding immediate payment through cryptocurrencies like Bitcoin, CIBC Global Money Transfer or a wire transfer from a money sending service
  • Taking advantage of the present situation by impersonating small business suppliers requesting a payment, or providing updated payment instructions
  • [Or] a charity or organization and asking for a donation”3

Whether it’s for your business or in your personal life, it is important to never disclose personal information with anyone. Personal information including your Social Insurance Number, banking information, passwords and PIN codes should always be kept confidential.

Fraud risk management – best practices for protecting your business

An ounce of prevention is always worth a pound of cure. This old adage continues to ring true when it comes to protecting your business from fraud in Canada. In addition to securing crime insurance that specifically aligns with the risks your business faces, risk management is essential. This is because phishing and other schemes aren’t slowing down.

In keeping with the theme of prevention, CIBC has compiled a number of fraud risk management best practices. Some of the most common fraud schemes can be prevented by keeping these best practices top-of-mind. A selection of these fraud tips can be found below. For example:

  • “Think before you click. Do not open email attachments or click on links from senders you do not know
  • Be suspicious of unfamiliar screens or request from websites/applications that you regularly use
  • Verbally confirm any financial transactions, payment instructions, changes to employee payroll information and changes to vendor payments requested by e-mail using a known phone number, and don’t respond to any number left on phone or fax instructions
  • Have a dual approval process for financial transactions
  • Define internal payment request procedures
  • Use secure remote access methods
  • [Conduct] timely bank account reconciliation and resolution of discrepancies
  • [Do] Independent audits of payment process and transactions
  • Backup systems regularly
  • Ensure employees are trained to recognize fraud, and what to do if they become a victim”4

For detailed information from CIBC about how to prevent fraud and make your banking safer, you can visit their dedicated banking fraud page here.

Get ALIGNED with experts | We can help you manage your business fraud risks

It isn’t easy adapting to new and emerging risks. Especially during COVID-19. Above all, we understand that you are working hard to keep your staff and clients safe. We’re answering specific coverage questions as well as helping people connect with the best possible business insurance options.

We are insurance advocates. No matter what the future brings, as your business insurance advocate, we are here to support you.

To sum up, we know how to align the best possible crime coverage options for your Canadian business.

Where to find more info about COVID-19 and the Canadian workplace

The pandemic is changing how we live, work and interact with each other. To help understand COVID-19 risks and commercial insurance Canada products, read our Insurance Blog. In addition, you can keep current by subscribing to our e-news ALIGNMENT Matters on our homepage.

Here’s a selection of recent COVID-19 related news articles that we hope you will find helpful.

Source(s): 1 History of Phishing ; 2,3,4 CIBC: Fraud Prevention Tip Sheet; CIBC:com Making your banking safer

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