Any given day small business owners have several competing priorities, from the day-to-day operations of their business to marketing, human resources, bookkeeping, tech support and even cleaning. Add the pressure of the pandemic and what is going on globally and it is no wonder that they have become the target of scammers. Owners simply have too much going on to be everything to every aspect of their business.
According to the Better Business Bureau (BBB), scams can impact every business, regardless of location, size, or industry. But they are especially a problem for small businesses. These businesses often don’t have the cyber security support or established accounting processes of larger companies. This can make them more vulnerable to scams.
Determining the true cost of scams and fraud is not an easy task. The Canadian Federation of Independent Business (CFIB), reports that one in every five businesses is victimized by fraud, yet 66 per cent of these crimes go unreported. In addition to the financial losses, which vary from hundreds of dollars to thousands of dollars; lost time, negative emotional impacts such as stress, and negative impact on staff morale were cited as the top
non-financial impacts of fraud in a comprehensive study conducted in 2016.
Understanding why small business is targeted, is only half the fraud prevention picture. How small businesses are targeted is the other half of the picture. Some of the most common business scams are very similar to the personal scams that are widely covered in the news—phishing, spear phishing, whaling, vishing, and smishing. The Competition Bureau of Canada sets out that, “all of the terms related to this group of scams refer to the same broad practice in which someone tries to trick you into giving up sensitive business information, such as credit card numbers, bank account numbers, and passwords.” The scammer typically identifies themselves as being from a bank, credit card company, one of the provincial utility companies, a service provider, supplier, or Canada Revenue Agency.
The most common scam specific to small business is also a form of phishing. Business Email Compromise (BEC) scams target individuals with an email that directs them to send money to “new” bank accounts. The email could appear to come from vendors, contractors, business partners, etc. This fraud has tripled over the last three years.
Another common scam is malware, malicious software that is designed to compromise a computer or network. It is most commonly “caught” through downloads, email attachments and links. Ransomware is a form of malware that blocks access to your business computer by locking the screen or encrypting information while the scammer demands payment to unlock it.
Phony invoice scams, directory scams, stolen identity/impostor scams, charity pitch scams, office supply scams, coupon books scams, vanity awards scams, overpayment scams, and business grants and loans scams round out the top ten list of common scams targeting businesses.
The BBB offers these tips to help small businesses protect themselves:
- Keep good records
- Be extra careful with payment procedures. Establish payment authorization procedures, including a multi-person approval process for transactions above a certain dollar threshold
- Avoid some payment methods like wire transfers, prepaid debit cards and gift cards as these are scammers’ preferred methods of payment
- Double check vendors
- Be careful what information you share
- Protect your devices. Make sure you have proper computer protection software and a firewall. Don’t click on links inside unsolicited e-mails.
Sometimes, despite being prepared, the unthinkable happens. In that case, report the scam to the local authorities and document the scam on the BBB’s Scam TrackerSM, an online database of scams.