The Better Business Bureau estimates that small businesses scams cost $7 billion per year, with an average of $4,373 lost per harmed business. Scammers can waste your business’s time and resources, destroy consumer trust, and hurt its bottom line. They employ countless techniques to try to get access to the data and assets of your business, and they’re always evolving. In order to protect yourself, it helps to be aware of the top scams targeting small businesses. Learning these common scams can help you and your employees recognize scams before the scammer gets access to their target.
Here are the top 5 small business scams to watch out for:
1. If Uncle Sam Is Calling to Demand Back Taxes – Hang Up!
One of the most common scams today is callers pretending to be IRS or government agents, saying that you owe back taxes or other penalties. They claim that if you don’t pay up, your licenses may be revoked immediately or your electricity will get shut off. It’s important to know that the IRS never calls you first. They always initiate contact by mail; if you owe them money, they will first mail you a bill, followed by a series of letters. If you ever receive a call from a government agency or other body of authority, hang up and call back on the official phone number to verify the validity of the call.
2. Verify Invoices Carefully
Fake and edited invoice scams abound. There are two main types of these scams. In the first one, scammers will gain access to the names of your suppliers via a hack or snooping, and create invoices that appear to be from your normal suppliers. However, these fake invoices will contain bank information that will have your procurement department wiring the money to a scammer! In a more sophisticated type of this scam, hackers will intercept real invoices coming from your actual supplies and edit them with incorrect wiring information that sends the funds to the scammer.
In the second type of fake invoice scam, scammers will send you an invoice for supplies – commonly office supplies – that you never ordered or received. They hope that your accounting department just pays the invoice and never verifies either that the product was received, or that it was ordered to begin with.
3. Confirm That Payments Made By Check Match Your Invoices
In this scam, your business will receive an overpayment via check from a scammer posing as a customer or supplier. The check may be more than the invoice amount. The scammer will call you to apologize for the error and ask you to refund the overpayment before or around the time you are depositing the check. Typically, they’ll ask you to wire them the difference. However, the check that they issued to you and that you cashed is a bad check – it will bounce. And the scammer will have made off with the “refund.”
4. Congratulations, You Won An Award! . . . Or Did You?
If your business receive a congratulatory email, use caution. Many scammers will pretend to run fake organizations or magazines saying that you have won an industry award, and asking for you to pay for membership, or a donation, printing, or full-page spread in a magazine. Their organizations or publications may even appear legitimate upon your first glance at their website – yet remain non-existent.
In a related scam, a scammer may fool a small business into buying “advertising” in a “directory” that either does not exist, or doesn’t reach a wide distribution list and provides no actual marketing value.
5. Keep An Eye On Your Bank Account
The most serious scam of all is an infiltration of your bank account. Sophisticated hackers can sometimes gain access to small business bank accounts and drain the funds. They may do so by phishing via emails with malware and keystroke loggers that capture login details. Be sure to check your bank accounts frequently, enable two-factor authentication, and set up text or email alerts for large transactions. If you experience any suspicious activity, alert your bank immediately so that they can freeze your account and look into it.
How to Protect Your Small Business: Quick Tips
- Check and approve invoices with care. If a supplier lists a new account number, call the supplier directly to confirm that this is legitimate. If a vendor asks you to change the method by which you’re paying them, investigate further.
- Don’t trust caller ID, even if there’s a pleasant voice at the end. If you receive a call from a utility or a supplier demanding urgent or delinquent payment, tell the caller you’ll call them back, and call the utility or supplier directly to confirm the validity of the call.
- Never cash a check if the amount doesn’t match the invoice. Bad check scams often start this way.
- Educate your employees. Send your employees this article and teach them about what to look for in a scam. Train employees to be careful about inbound calls and emails. Encourage them to come forward to you or a supervisor if anything seems fishy.
Scams and scammers are common. You’ve probably already encountered your fair share. It’s worthwhile to educate yourself and set up safeguards to protect your business’s assets and data. If you keep your wits about you and eye inbound messages with skepticism, you should be able to stop most scams in their tracks.