The risk of false or unverified data is significant in a time when it is essential to business operations, particularly for small enterprises.
“The Association of Certified Fraud Examiners reports that U.S. businesses will lose an average of 5% of their gross revenues to fraud,” said Cindy Vestergaard, Vice President, Special Projects and External Relations at DataTrails. “When losses do occur, only 49% of businesses have been able to recover funds lost, while almost two-thirds of businesses recover 25% or less and only one-fourth recover more than 75%.”
Maintaining the integrity, profitability, and reputation of your company depends on your ability to recognize and combat fake data. Here are the things you should know about fake data and how to guard your company from its negative consequences.
Recognizing the dangers of bogus data
A major risk to an organization’s financial stability is fake data. In 2022, payment fraud targeted 65% of organizations, according to PNC Bank. Additionally, Vestergaard pointed out that vendor fraud schemes target small businesses more than others.
“Twenty-nine percent of small businesses [reported] an attempt to scam their accounts payable into paying a vendor or multiple vendors — whether fake or real — for false claims,” Vestergaard said.
Inaccurate or fake data can also result in bad decisions, which can affect anything from marketing plans to inventory control. Losing a client’s trust could be just as harmful and eventually result in long-term reputational harm.
“If customers discover businesses have been using fake data, trust is eroded with clients, who may question the company’s commitment to safeguarding their information,” emphasized Vestergaard.
It is not only essential for business purposes to ensure data authenticity; it is also required by law. Falsified or unverified information may result in compliance violations, which carry significant financial and legal ramifications.
Techniques for thwarting fraudulent data and safeguarding real data
To combat false information and safeguard the real data used by your company, adopt these crucial tactics.
Establish the foundation for authentic data
Knowing where your data is kept and who can access it is the first step in thwarting fake data.
“This helps in understanding the flow of data and identifying critical points where provenance should be tracked,” Vestergaard explained.
She also advises developing precise data governance guidelines that specify who is in charge of what data, how it should be handled, and how to manage it most efficiently. Ensuring that sensitive data can only be accessed by authorized individuals is ensured by implementing access controls and the principle of least privilege.
“By maintaining a trail of where documents come from and who has handled them, businesses can more easily verify their authenticity and respond to potential security incidents,” Vestergaard said.
Save just the information you require
The Federal Trade Commission (FTC) recommends obtaining sensitive information only when it is absolutely necessary for business purposes and retaining it for no longer than that.
If your business takes credit cards, don’t keep account numbers and expiration dates on file unless they are absolutely necessary for day-to-day operations. Additionally, make sure your company’s mobile app only accesses and gathers the data necessary for it to operate.
Make use of metadata and technology
Using metadata can assist companies in combating fraudulent data. Data verification is facilitated by the inclusion of details such as the creation date, author, and revision history, which help with version control throughout a document’s lifecycle.
Think about making an investment in technology, such as databases with integrated audit functions or document management systems, that automatically monitors and logs data interactions. Blockchain technology has the potential to be especially useful in producing nearly impossible-to-fake, immutable records.
bolster the security of logins
Many hackers exploit security flaws, like lax password and authentication requirements, to steal data. To establish a user’s identity when using multi-factor authentication (MFA), several touchpoints are needed, such as entering a security code from a different device.
Many hackers exploit security flaws, like lax password and authentication requirements, to steal data. To establish a user’s identity when using multi-factor authentication (MFA), several touchpoints are needed, such as entering a security code from a different device.
Purchasing a password manager for your business is another way to improve login security. Password managers can limit the repetition of unsecured passwords, securely share passwords among employees, and automatically generate strong passwords with just one master password.
Encourage a data-aware culture
Lastly, make sure that your employees understand the significance of data provenance and proper data handling. Workers should be able to spot possible problems with the authenticity of data and know how to fix and prevent those problems. Your company will be ready to respond swiftly and efficiently in the event of an incident if you have a thorough plan in place to handle breaches or the exposure of fake data, and you make sure your staff is capable of carrying it out.