Are You Going To Lose Your Business To Fraud? by Danny Boice

Danny Boice on “Are You Going To Lose Your Business To Fraud?”

According to the Federal Trade Commission, the average business loses 10 percent of its revenue to fraud and deception each year.

While this stat should be shocking, many businesses blow right past it. Perhaps even your response is to look away. You might think, It’s an unavoidable problem or It won’t happen to me.

You would not be wrong to feel your response is justified, but what if I told you that this loss is at the hands of employees 95 percent of the time? This problem is not so theoretical these days. It is genuine and hits very close to home. Here are the facts: rarely is the customer or client doing the cheating; and despite all the press about Russian hackers and cyber attacks, fraudulent behavior rarely comes from outside actors.

Fraud is an employee problem — a people problem. Fraud and deception can happen at any stage in the employee life cycle: pre-employment, within the period of employment, or post-employment.

Of course, fraud doesn’t only affect businesses; the problem extends to every individual. In the United States, 70 percent of adults have been defrauded once in their lives, and 25 percent twice. The issue is ubiquitous.

As business owners acknowledge these risks, they often feel paralyzed. The fear becomes overwhelming and keeps them up at night. Perhaps these feelings of fear describe you. Here’s the good news: solutions do exist. Fraud is a manageable problem, not out of your control. And by just reading this post, you have done more than most companies. You are well on your way to better protecting your business.

No Other Options?

Because of our work in the trust and safety space, we’re used to people cornering us at cocktail parties to learn more about what we do. We often feel an urge to lie because we know what we’re about to hear: another sob story about how someone got ripped off by a business partner or ex. Everyone has one of these stories once they’ve lived long enough.

Still — even though the problem of fraud and deception is broadly understood — businesses ignore it. Most companies spend enormous amounts of money on social media and marketing, all the while allocating none of their budget and resources toward truth, trust, and safety.

In most cases, we’ve found that business owners and executives assume there are no resources to mitigate the risk. A business might be losing 5 percent of its revenue to fraud every year, but the problem is shrugged off with a simple statement like, “Well, that’s just what happens.”

With this embedded mindset, businesses cannot accurately measure the value of resources that can take care of this problem. Only the top 1 percent of companies can afford services from the likes of Kroll — very specialized, expensive investigative consulting firms. Kroll deals with corporate espionage and international government contracts, and clients spend upwards of $100,00 for three days’ worth of work with them. No wonder businesses balk at the idea of spending money on dealing with the issue of fraud!

On the other side of the equation, some businesses settle for low-cost options that have a perceived value but don’t take a deep dive into what they need. On the HR side of the house, solutions like Sterling are popular. In reality, Sterling is just a background check service; it does very little to mitigate significant risks. It merely has done a great job of marketing in the HR space.

The entire trust and safety spaces are antiquated and fragmented. It’s a yellow page industry. Things were done a certain way for so long that businesses just threw their hands in the air and said, “Well, there’s nothing better out there.” That thought haunted us. Were there no other options?

Our Path to a Solution

We started Trustify to fill a real need in this space, but our route to arrive at a solution was quite circuitous.

My wife and co-founder, Jen Mellon, came from the world of public service and government. The day after graduating from Bucknell University, she started working for the Congressional Coalition on Adoption Institute. Jen worked with the most marginalized populations of children in the US and abroad and later recruited as the youngest Executive Director in the history of Joint Council on International Children’s Services. At twenty-four years old, she was running this massive international organization.

When Jen became a mother, she decided to take up the mantle of entrepreneurship her family had passed along. She started two different businesses in the regulatory space. Later, when called back to work as the interim Executive Director for the Joint Council, Jen and I started dating and talking about the idea of starting a business together.

I, Danny Boice, come from the tech world. In the two businesses I started, I focused on using product design and engineering to solve problems in antiquated industries. I also taught on these same subjects at Georgetown University. A few years ago, I was appointed to be an entrepreneur in residence at US Health & Human Services. About five to ten individuals are chosen, who work there for three to six months on one specific problem in the government. The goal is to be disruptive and think outside the box.

The problem assigned to me in that role has informed a lot of our mindset around trust and safety. Health and Human Services were facing were facing an issue, in which criminals are defrauding elderly Americans at record rates. As the boomer population retired and needed help in the form of in-home care, meal delivery, and nursing homes, they were being ripped off in record numbers. I spent six months living and breathing that issue before starting Trustify with Jen.

Our life experiences also led us naturally to focus on trust and safety. From an early age, I understood what it meant to be part of a very vulnerable population. Later in life, when I went through a painful divorce, I needed a private investigator for a child custody situation. The whole experience was an awful, yucky mess, and Jen and I kept the thought in our back pocket that there must be a better way to access PIs.

Over the years, we had helped each other navigate through different businesses. Now that we were ready to start a business together, we knew exactly how to test our long list of ideas. A few ideas we proved with quick MVPs flopped. Finally, we found where our expertise and background could meet a real need when we ran Facebook ads to measure consumer demand for private investigators. The conversion rates were through the roof.

We bought every IBIS report out there, and we were hooked. Analysts describe the PI space using all the words entrepreneurs love, like fragmented and antiquated. It had been around since Abraham’s Lincoln’s time, and the current professionals in the field were great at investigative work but unskilled at business development, customer acquisition, and running a business. We saw an opportunity to create the first national network of PIs.

We took advantage of Jen’s background and were able to quickly get to the Attorney General and all other regulators in each state to let them know who we were and that we wanted to operate by their rules. We were off to the races!

Though this book focuses on the B2B side of our business, it’s important to share our heart behind our work. Long before Trustify, we cared deeply about anyone in a vulnerable situation; we wanted to make sure that the company had a social mission component at its core. Instead of thinking social good would happen later down the road, we went in from day one seeing a great need.

We have had the privilege of helping with birth parent unifications and former foster youths looking for family members. We’ve had people come to us, saying, “I don’t have the money for this, but I’m a survivor of domestic abuse and going through a horrifying time.” We’ve heard, “ My child is missing, and the police said to wait 24 hours because she’s 16 and it could be a runaway. I know my child would not run away, and I don’t have 24 hours.” On a couple of occasions, women have come to us saying, “I think my husband is cheating on me and frequenting a prostitute.” Our PIs would end up discovering a trafficking ring, and we would be able to get this information to the authorities to save the trafficked women.

Our PIs have always been excited to be part of this pro bono work. We’ve formed partnerships with the A21 Campaign (an international anti-trafficking organization), the Midwest Innocence Project (which works for various individuals wrongfully convicted and incarcerated), and Becky Sun (which is a national domestic violence organization).

When we work with businesses, we have this same focus on trust and safety. Ultimately, our goal is to help vulnerable populations who are at risk in some way. We recognized very early on that all businesses are at risk.

Trust and Safety for the 99 Percent

Understanding the problem is only part of the equation; our message is one of hope.

Trustify is derived from Reagan’s famous line “trust but verify,” which he got from an old Russian proverb. As a business owner, you do not have to think the worst of people, assuming all humans are evil. Trustify is not about spying on people Big Brother style. Everyone isn’t out to get you, and focusing on fear is never helpful. Instead, we encourage businesses to be clear-eyed and realistic when it comes to genuine threats all companies face.

It’s now more comfortable, less expensive, and more acceptable than ever to verify things about people. If you can be in control of your time, your treasure, and your talent, why not be? If you have access to be able to check if something is not quite right, why not take a step toward trust and safety?

We have sought to democratize access to investigative resources. We’re competing against detection agencies that have been operating since the nineteenth century. These companies take a $5,000 retainer and then charge like lawyers, but they’re not the right service for 99% of businesses.

Now everyone can have access to the truth. Now you can download an app and quickly find high-quality PIs who are affordable and accessible.

Our Goal: To Empower You

As parents, we joke that our kids will never get away with anything because we know all the tricks. We earn our stripes as parents when we can detect something is not quite right. We view our work with businesses in a similar light.

If you’re scared because you don’t know what tricks to look for or what’s out there that might bite you, this book will help you identify the risks. You will learn how to protect yourself from the most common types of fraud. You will learn the tactics people use to take money from your business. Even if you’ve already been the victim of fraud, we’ll help guide you toward the best solutions.

Our goal is also to help you separate fact from fiction — to show that the real threats to your business don’t come from cyber attacks but employees. Being able to separate fact from fiction should lead to greater peace of mind because the employee issue is not out of your control.

Dealing with dishonest people is nothing new. But now the problem for businesses has become more complicated because of technology and a new perception about trust and safety in our modern world. In Part One, we will examine our present reality and how we got here.

Be sure to tune in next week to learn more.

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This publication is the official collection of Danny Boice blog posts

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Danny Boice

Danny Boice

Trustify Founder & CEO.

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