How to Protect Your Small Business Against Scams

Consumers frequently fall victim to fraud and scams but businesses are also at risk. Scams involving small businesses result in financial losses of approximately $7 billion annually, according to a 2018 report from the Better Business Bureau and Federal Trade Commission.

Not only can scams result in lost profits, but resolving them can cost you valuable time. Scams can also be damaging to your business reputation and cause customers to lose trust in you. Knowing how to defend against scams can protect your business from those negative impacts.

Get Employees On Board

One of the most common business scams involves social engineering and phishing, with employees as the primary targets. The end goal of these types of scams is to trick employees into sharing business information, such as login and password information, financial account numbers, and personal customer information.

Educate employees on the most common types of business scams, including social engineering and phishing scams. Train them in email and data sharing best practices, such as not sharing sensitive information via email, verifying email requests for data with you or their supervisor, and not clicking links or downloading attachments from email addresses or senders they don’t recognize.

Double Check All Invoices and Requests for Payment

Another method scammers use is generating fraudulent invoices or making fraudulent payment requests. For example, you may receive an invoice for an inventory shipment that was never received from what appears to be a legitimate supplier. Alternately, you may receive a shipment that you never ordered, followed by a request for payment.

In some cases, the scammer may go as far as posing as an agent for a government organization, such as the Internal Revenue Service. You may be told you have an unpaid tax bill or that your business license is expired and you need to pay a fee to avoid collection or legal action.

In each of these scenarios, scammers are counting on you skipping due diligence. You can protect your business from these types of scams by verifying each invoice you receive against orders and deliveries. Keeping accurate records of payments for income and estimated quarterly taxes, property taxes, business license registrations, and other government payments can help in fending off scams involving government agency imposters.

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