Managing and monitoring your business checking accounts is just as important as managing your personal accounts. For entrepreneurs, their business accounts support their livelihood, and if you don't have a second source of income, it could cause dire consequences if your business account is hacked. Most importantly, if a commercial account's debit card is hacked, the Federal Deposit Insurance Corporation (FDIC) does not extend protections to businesses. How do you protect yourself and your business income from fraud? Here are a few tips.
Protecting Your Business Account from Fraud
Find a Reputable and Large Banking Institution
Finding a large bank like Chase, Bank of America, Navy Federal Credit Union, or any other well-known bank may give you additional protections in business banking. Smaller banks may be unable to reimburse your bank account if a large fraudulent charge occurs. This can leave you and your employees without pay, causing potential layoffs and price increases. Larger banks have additional resources that can help you recover your funds, however large or small.
See my feature in: 10 Steps to Finding a Better Bank
Secure Your Business Debit Card
Ensuring that your business debit card is in a safe place can help protect you from fraudulent activity. This is because debit card protections differ from credit card protections. Yes, your liability for debit card transactions may be $50 in most cases. However, business debit cards are not protected by federal law. So, if someone fraudulently used your debit card online or in person, your business could be responsible for the entire transaction.
Report Fraudulent Activity
While reconciling your accounts, you may find that fraudulent activity has occurred. I found seven separate transactions on my business banking account from Amazon.com. These charges had occurred recently, and a few had been posted to my account. Luckily, I reconcile my bank accounts often and was able to report them to the bank promptly to have them reversed. There were even pending charges that were continuing. The bank quickly canceled the debit card I still had in my possession to stop further fraudulent activity.
Monitor Your Accounts
It's essential to monitor your business accounts regularly. This will help you identify any fraudulent transactions. As a small business owner, criminals know that you wear multiple hats and that bank account monitoring will be at the bottom of the list when trying to establish and grow your business. Set a schedule for when you are going to reconcile your bank accounts. If you don't have time to do it, then now may be the time to hire an additional employee to ensure your business is protected.
Obtaining Fraud Insurance
You may not think that fraud insurance is essential until you are in a situation to need it. Your business could be susceptible to fraud if you have employees or other personal information easily accessed by others. It could cost significantly less than what you have saved away in your bank accounts. There are numerous stories of large and small companies going out of business or owing investors millions from the fraudulent activity of their employees. Taking this additional step to protect your dream can keep your business afloat if fraud does occur.