Welcome to Fraud Fighters: Combating Fraud One Battle at a Time

In this kick-off episode, we introduce our host and partner of our Risk Management team, Debbi Fetter. Debbi provides an overview of what the “Fraud Fighters” series is about, what inspired it, and what listeners can expect to learn. Our goal for the series is to help our audience learn how to lessen, mitigate, and in some cases prevent the blow that comes from fraud incidents targeting businesses today by properly aligning banking products, internal checks & balances, and information technology measures. 

Transcript

Amy B. Klatt: Hello and welcome to an episode of the Herbein Conversation Podcast, where we dive deep into the trending topics that impact your business. I'm your host, Amy Klatt, and with us today is Debbie Fetter, partner and leader of our risk management practice.

With over 25 years of experience providing risk management, internal audit, and compliance audit services to clients, I'm extra excited as today really marks the launch of our Fraud Fighters Podcast series. I'm even more excited to announce that Debbie will host and share her expertise on episodes going forward with timely strategies and special guests.

So first off, Debbie, thanks so much for joining us today.

Debbi S. Fetter: Absolutely. And thank you for hosting me. As you said, I'm excited, and I'm Debbie Fetter. I'm a partner with the firm's risk management practice, where I specialize in internal controls, information controls, and everything fraud-related.

I'm an expert in poking holes in how a process is set up, how a system is configured, and how somebody can perpetrate a fraud, whether that's internally or externally. I've been a fraud fighter, if you want to call me that, for 25-plus years, serving clients ranging from nonprofits and governmental organizations to regional banks and corporations. I'm certified in a lot of things, including control self-assessment, enterprise risk management, and information technology, to name a few.

I've spent my entire career specializing in processes and internal controls, and just poking holes in where things can go wrong. Anyone who knows me knows I'm pretty passionate about helping businesses and individuals financially succeed with the right-sized processes, tools, and controls that prevent loss but are still effective. We don't want to create Fort Knox for people, but we want to help them mitigate their controls.

I'd like to think that because I think like a crook, I can help put the right controls in place to prevent the risk of fraud and help our business succeed while fraudsters don't succeed.

Amy B. Klatt: I I love that and I and I chuckled a little bit with the the thinking like like a crook.

So with you being a fraud fighter for over 25 years, you want to talk a little bit about maybe the inspiration behind the Fraud Fighters Podcast series, and really, what the the listeners can expect to gain from these upcoming episodes?

Debbi S. Fetter: Sure, absolutely. You know, besides the fact that, you know, I just really enjoy talking about fraud and internal controls and risk management in general. I do that both in my personal life as well as my professional life, so God bless everyone who's around me.

Four months' knowledge is a personal tool, you know? And what better way to share that knowledge and help people fight potential fraud? Because you will be a victim at some point in time; that's just where we are today in life. But what better way than a podcast series to share our risk management knowledge, our internal control knowledge, and to reach a larger audience to help them put some controls in place before that fraud, before that financial hit actually impacts them?

Honestly, I saw a need to bridge the gap between fraud prevention and awareness and the fraud tools that are readily available out there, even free, but are underutilized by both businesses and individuals. I received quite a number of questions from our firm's existing client base and some of our own partners, mainly after somebody has incurred a financial loss or has had some sort of reputational risk.

It's things like a fraudulent ACH has hit my business checking account and the bank says there's nothing they can do. I'm not getting my money back or I've had a cyber hack and my systems were just compromised. Now what do I do? So, we really want to be able to help our business clients not be reactionary, but put some progressive internal controls and tools in place so that maybe they can mitigate the risk of being compromised.

In this series, I'm hoping that we can give you information and give everyone information on frequent fraud scenarios, learn from others' mistakes, quite honestly, and tips on how you can use them properly. Some of my background has actually been in banking, so we understand the banking products and those internal controls as well. We can help businesses and individuals understand what's out there.

You may have a banking product that helps you, but you need to properly configure that banking product. It's one thing to have it in place, but if you don't have it configured, it's as good as just a book on the shelf. So, we really want to use this series to educate people and help mitigate the risk.

Amy B. Klatt: Great. Thanks. I really like the concept of helping people and business owners be proactive in putting controls in place. Working in marketing for our firm, I know that fraud and risk concerns often show up as top concerns for our clients and other business owners. This is evident in our client surveys and regular discussions with our partner group. So, I love that we're able to provide an overview series covering the topics that people are actually impacted by.

Jumping into a little bit of background, do you want to give us a basic definition of how you define fraud and maybe some common types of fraud that businesses and individuals may encounter based on your years of experience?

Debbi S. Fetter: Sure, absolutely. You know, I think fraud in this context is the wrongful deception intended to result in financial or personal gain for someone else. It can involve deceitful practices, false representation of facts, or taking advantage of another party. It's everywhere and more rampant than ever with the advance of technology. It's not a matter of if you will experience fraud, but when and to what degree you'll experience it.

As far as the types of fraud that affect businesses and individuals, the list is huge. Some of the more frequent ones include email compromise and email phishing. For businesses or individuals, scammers use deceptive emails, text messages, and websites to trick people into transferring their data or revealing sensitive information that they use later on. Mobile devices, like iPhones, are increasingly targeted and harder to detect. Clicking on a link in a text message has become more of an issue because people are now more sensitive to emails but don't think about text messages.

Check fraud might seem old-school, but it's seen an exponential uptick in recent years. Check washing is common, with checks being taken from people's mailboxes. Technology makes it easier for fraudsters to alter checks now than it did even ten years ago. There are also electronic means, such as ACH and wire transfers, where unauthorized debits and credits can go through someone's bank account. Often, it's hard to get that money back depending on the type of account.

Account takeover is another issue. Fraudsters can gain access to your bank accounts, especially since many of us use online banking. Securing that is crucial. Then there's traditional insider fraud and misappropriation, where someone in a business or even a family member takes over some of your information and money inappropriately.

Cyber attacks and other similar schemes also contribute to the list. Fraudsters are constantly recycling and revamping their schemes to continue their fraud. Fraudsters aren't complacent, and neither should we be in our fight against fraud. It's everywhere.

Amy B. Klatt: Yeah, those are all really great points and things to think about where fraud can take place. And I know that with our internal IT team as well as some of the things that our cyber practices are working with, we're always talking about the schemes and the tactics getting better and better.

Especially with the technology, like you've mentioned, and with the impact of AI, it's important to stay informed. So, maybe you can talk a little bit about why it's important for businesses and individuals to be aware of the fraud risks.

Debbi S. Fetter: Sure, absolutely. And to your point, everybody actually goes through fraud fatigue as well. There's so much out there and so many ways that people can get our information that we often let our guard down.

To that vein, there's the financial impact for businesses. Whether it's through embezzlement, asset misappropriation, or cyber attacks, fraud can drive a business out of business. There's also reputational damage, which is huge. Customers can lose trust very easily. If a business has some type of attack or fraud, even if it's somebody who's only taking $10,000 but it hits the front page of the Business Journal, that damage and reputational risk can be irreversible.

Operational disruption for a business is another major concern. Fraud can shut down normal business operations. You can't get products out or serve your customers. Recovering the losses, including the time and talent to unravel the fraud, just becomes more and more burdensome. Lastly, employee morale is affected. It impacts trust within the company, and potential hires may avoid a company if they've seen it has been subject to a lot of fraud.

For individuals, the impact can be even more severe. Financial security is at risk. If someone drains my checking account, it can take a while to get that money back, if I get it back at all, which can damage my credit score and future credit initiatives. The emotional distress of falling victim to fraud can cause stress and anxiety, which is significant.

Additionally, fraud has an impact on community resilience. When individuals are aware and contribute to a safer community by sharing their knowledge and supporting anti-fraud efforts, it can be very impactful. Fraud awareness helps both businesses and individuals detect, prevent, and mitigate fraud. By staying informed and continuously challenging what you have in place, you can build a stronger defense against fraud. Remember, fraud will always occur. It's about limiting the impact so that it doesn't take somebody down.


Amy B. Klatt: Yeah, that's a great summary. And I always tend to think about the financial and reputational damage when I think about the broad impact, but there's obviously so much more than that to think through.

Just to leave us with some strategies and best practices, what are some key strategies or best practices that businesses and individuals can use to implement and mitigate fraud risks?

Debbi S. Fetter: Sure. Well, foremost is to stay tuned for additional episodes of our Fraud Fighters podcast because knowledge and awareness are key. Just understanding what could go wrong, what's already in place, what needs to be adjusted, and where there are gaps is crucial.

Amy B. Klatt: Yes.

Debbi S. Fetter: You know, so it's also training; the human aspect is huge when it comes to fraud. Whether it's employees or individuals, just having training so they are informed is crucial. Technology is a driving force in the pace of fraud due to online systems, so making sure that you're using the proper technology controls is essential. When you're asked to enable multifactor authentication or receive a text code, it may seem like a hassle, but it adds an extra layer of control and security. Using strong passwords is also important; avoid using easily discoverable information like your dog's name. In the past, I may have used my dog's name and birth year, but people can find that information easily. Using programs that create strong passwords or developing a system for creating better passwords is highly recommended.

Using secure communication channels is critical for businesses. It's about understanding and identifying where your gaps are. Internally at a business, it's important to assess your processes and operations. What do you currently have in place, and what do you need to implement? Having independent eyes look at your processes can be beneficial. My team specializes in this; we evaluate processes to identify strengths and weaknesses. Your process may not be broken, but it may not be as strong as it could be. For example, you might be using manual logs instead of automatic logging. Simple controls like account reconciliation or a secondary review of business accounts online are effective measures.

There are many controls you can implement for every fraud scenario. It's about identifying the controls that are most relevant to your situation. So, stay tuned to our podcast because we aim to educate the community on effective fraud prevention measures you can implement.

Amy B. Klatt: I'm I'm definitely excited for that and I think that the more we know, the stronger we we can be. So I know there's much more to come on the topic of strategies where we'll get into additional detail. So stay tuned and until then, thanks so much for joining us today. Debbie, I'm so excited to see what's next.

Debbi S. Fetter: Absolutely looking forward to it and remember, you know, think like a crook. Put the tools in place and together we can actually fight some of that fraud out there in our community.

Amy B. Klatt: I love it. So a friendly reminder to our listeners, make sure that you sign up on her by.com/blog to receive alerts and notifications of when we publish any thought leadership instantly.

Also, we will be then notified about the upcoming series we talked through today.
So thanks again for tuning in to another episode of The Burbank Conversation.
We're focused on being your go to source for thought leadership and education as we continue to explore trending topics that impact your business until next time.