Methods for Avoiding Fraud

What are the best methods for going for avoiding fraud? We here this question all the time. It’s kind of funny because everyone that always ask this question is typically in business. And by their very nature, business owners and entrepreneurs are risk takers.

Business owners and entrepreneurs have a different risk aversion level than most people. Because of such, whenever an opportunity comes along, we want to stop and ask ourselves: Is this an opportunity? Because business owners and entrepreneurs are risk takers, oftentimes, they don’t do their due diligence.

Essentially, the question comes down to: How do you determine a fraud from an opportunity? They are similar.

We get asked this question all the time. People will say, “Hey, I got presented with this opportunity. What do you think?” There are some simple things you can do. Of course, we incorporate everything from our experiences and our intuitive senses to the mechanical due diligence processes we use and the resources we have. But there are a lot of things you can do on your own.

The first thing I suggest is: How did the opportunity come to you? Why you? When we sit down with folks, it’s almost always an investment opportunity. Or somebody wants to connect somebody to an amazing deal. If it’s a get-rich-quick idea, I’m going to tell you, folks, that 99.999% of the time, they are not legit.

Think about it. For those of you who run very successful businesses, it’s the adage of overnight success, but nobody sees the ten years leading up to it. There are some opportunities that are very immediate gains.

And you can ask yourself if it’s in alignment with where you are sitting in a reality perspective. What do I mean by that? If you’re barely making ends meet and your business has brought in maybe a few hundred bucks that month and all of a sudden there is this opportunity for you to get involved with a multi-million-dollar project, is that in alignment for you? Just some things to think about. It may be.

But do your due diligence. We have seen everything from new network marketing companies that have the appearance of legitimacy but in actuality are Ponzi schemes. We have seen capital opportunities that have shown up,  but when you look at the opportunity deeper, you realize it will actually cost you money. You have to take the time to stop and ask: What is this opportunity, and is it truly an opportunity?

We’ve seen it all. We have uncovered fraud. When we were doing the majority of our work as consultants, we saw every arena you can think of. Even in the service arena where you think you’re hiring somebody to build a website, that’s an easy one for people to get away with it. It’s a legitimate business. You need somebody to build a website, and this person is building websites. A lot of the time they are charging thousands of dollars and run off with the money. But they looked legitimate. They talked a good game. As a small business, that might take you down.

Here’s the thing. The people who are out there committing frauds and scams are savvy enough to know that you’re not going to ask the questions or backstop the question deep enough because they know you won’t verify that information.  

For that matter, they’re counting on it. And they do it time and time again because most small businesses, when they lose that chunk of change, they don’t have the money or the time to litigate because they are busy doing clean-up.

The other thing I want to throw in there is being presented with an opportunity from your friends. That’s one of the worst things we’ve seen. Most of the time, your friend is very well-meaning. Because it comes through that channel, we think they’ve done some due diligence and that it’s legitimate. A simple question for your friend is: Have you used them for your business? If they haven’t, then you still need to do some due diligence. Even if they have, unless your friend has the exact same business you do, then you still want to do due diligence for your specific business needs.

I know we want to take the easy way out. We get it. We’re guilty of it, too from time to time. But eventually, if you always take the easy way out or don’t do your due diligence, it will catch up to you. Like we like to say, when it goes bad, it goes really bad.

 

2016-12-19T12:53:43+00:00

About the Author:

Justin Recla has over 13 years experience and advanced training with the US Army and federal government. He is a subject matter expert in tactical questioning, surveillance, counter espionage, threat and vulnerability assessments, and investigative techniques. He is an educator in concepts of effective communication and has taught hundreds of future federal agents how to conduct interviews and investigations. Justin brings his skills from the military sector and delivers them to the boardroom to help business owners protect their two most valuable assets: Time & Money.