The profile of a small business fraudster


Worried about that new, young guy ripping you off? He might, but that’s not the profile of the typical small business fraudster. 

The typical small business fraudster is a woman, 60 years old  or older, who has worked with you for four to six years. That’s why fraud can be emotionally devastating as well as financially painful. It’s the long-term, trusted employee who’s like a member of the family, who is often the person skimming money from your accounts receivable.

It makes sense if you remember the fraud triangle of opportunity, pressure, and rationalization.

If someone has been with you forever and is mature they’re someone you trust. And it’s only someone you trust who is going to have the opportunity to create a fictitious vendor or doctor payroll records. They’re also likely to know your protocols, or more likely, lack of protocols. A mature woman may also be more subject to lifestyle changes that put them under money pressure, such as divorce, spouse loss of job, child returning home, or elder care issues, 

The best solution is to create a policy that requires periodic background checks of existing employees, vendors, and suppliers, not just new people, 

In addition, watch out for any warning signs.

  • You’re close knit bunch, right? If you’re supportive of employees you’ll learn of lifestyle changes and can help before an employee becomes desperate.
  • Look out for any signs of an employee living beyond their means. How’s your divorced 62-year-old bookkeeper managing to drive a new Mercedes?
  • An employee who avoids taking time off or being out of the office, who keeps messy records, or who constantly misfiles documents, could be worried about being discovered.
  • A person who takes company records home, comes in early or stays late, or goes to the office on days the business is closed, could be looking for an opportunity to cook the books.
  • Someone who advocates replacing your current accountant or payroll firm, or who asks to take financial tasks off your hand to “make your life easier,” could be looking to make fraud easier.