Small businesses lose around 5% of their revenue every year as a result of fraud and scams. Cybersecurity issues, fraud and online scams are some of the biggest threats to both individuals and businesses. Losing either your personal or business savings can be a devastating loss for anyone.
We want you to be aware of the scams affecting businesses and what to watch out for when it comes to fraud prevention. Many of these scams also affect nonbusiness owners, or could come up in your personal life, so stay aware with these cybersecurity tips.
Check Fraud
Check fraud is one of the oldest types of scams around, but it doesn’t mean it’s happening less in the digital age. Let’s take a look at a few common examples individuals and businesses may face.
Counterfeit Checks
Counterfeit checks are a growing concern for consumers, especially small businesses. In this type of fraud, scammers steal business bank information and use it to create fake checks. These counterfeit checks are then sent to other scam victims, who unknowingly cash them, causing financial havoc for the original account holder.
To avoid falling victim to such schemes, it’s crucial for individuals and small businesses to monitor their bank accounts frequently. Regularly checking account statements and transaction histories can help identify any unauthorized or suspicious activity early, allowing for prompt action to prevent further fraud. If you see any unusual activity, reach out to us at your local branch right away.
In addition to account monitoring, businesses should take measures to protect their banking information. Always use secure, encrypted communication channels (like password-protected Wi-Fi) when sharing sensitive information and educate employees about phishing and other common scams designed to steal important data or account information.
Fake Check Scams
One of the most common forms of check fraud we see at CS Bank, Fake Check Scams affect businesses and individuals alike. In this form of fraud, scammers will present their victims with a check—sometimes as payment for something they purchased and sometimes as part of an advertised job that you are purported to be hired for, like a mystery shopper or personal assistant. Whether they run off with goods without paying for them, ask for money back for a check they wrote that’s an overpayment, or request you buy untraceable payment methods like gift cards with the funds, criminals can take advantage of your trust and vulnerabilities in the banking system to defraud you. Since it can take weeks to detect a fake check, by the time you (and your bank!) realize the check isn’t legitimate, the thief is long gone.
To avoid falling victim, never accept a check for more than the selling price of an item, as this is a common scam tactic. Never cash a check from a stranger or “new employer” and then use the money to buy gift cards, money orders, cryptocurrency, or to wire money to anyone who asks. And finally, if you are a small business owner, always take down driver’s license information before accepting a check from a customer—especially customers you don’t routinely do business with.
Fake Orders
Scammers are smart and can create fake invoices that are sent to business owners, making it look as though you’ve ordered something from a legitimate business. You could receive these via email or even a phone call where they’ll call to confirm the order number.
Never pay an invoice if you’re unsure where it’s come from or if you can’t confirm that it’s real. Research whether you or someone else in the business may have ordered something before you pay or hand over any payment details.
Counterfeit Cash
A customer may come in to pick up an order with a small retailer and pay with a $100 bill, even if the order was significantly less than $100, and ask for change instead. Always check if that $100 is fake, as business owners can easily lose out on money if change is given for a fake note. Verify that any bills used are real and you could even go as far as not allowing customers to use $100 bills for their purchases.
Authority Figure Impersonation Scam
One of the biggest issues in cybersecurity for businesses is when scammers pretend to be someone they’re not. This could be in person, by phone, or digital communication like email. They’ll typically pose as another business or a government agency in an attempt to gain your trust.
Another common impersonation is utilities companies, where you’ll receive communication that a bill hasn’t been paid and your electricity or water is going to be shut off. Northwest Arkansas recently saw a scam where hackers were impersonating the police in an attempt to scam small businesses using wire transfers.
Always ask for ID if someone is claiming to be from an official organization. If you’re receiving phone or digital communication, hang up and search for a publicly listed number that you can call back on.
Tech Support Scams
It’s very common for tech support scams to target both businesses and individuals. This is where scammers will set up fake alerts to tell you that there’s something wrong with your computer system.
You’ll either have to pay to “fix” the problem, or they could embed malware into any popup notifications on your devices. This could give them access to sensitive data like passwords or even bank logins.
Always consult with your IT department or whoever you usually work with for tech support before providing any sensitive information.
Directory Scams
All businesses want to grow their customer base and be found more easily online. So when you get a call from someone offering to advertise your business or host an online ad listing for free, it may be too good to be true.
In many cases, it is. Either scammers will be using this trick to get you to hand over information about your business, or they’ll bill you later for the advertising and pressure you into paying them.
Fixing Bad Reviews Scams
No one likes bad reviews, especially public ones like on Google and Facebook. You may get a call from a company claiming that they can remove your brand’s negative reviews. But this is actually impossible and, if they’re posting hundreds of positive reviews to hide the bad, these fake reviews are illegal.
Remember that there’s no real way for Google reviews to be completely removed, unless Google finds the review to violate certain review posting conditions.
Phishing
If you’re trying to learn how to prevent scams, you need to be aware of phishing. This is a broad category of scamming where cybercriminals use social engineering to trick people into giving up personal or sensitive information.
For instance, you may get an email from Amazon telling you to click a link to confirm payment details but it’s actually fake. Or you could receive a text seemingly from your bank about financial information, encouraging you to input your card details.
Most phishing scams will create a sense of urgency, making the recipient panic and give over their details without thinking. Always ask yourself about the validity of emails or texts that do this, and contact the party with trusted contact details. Do not click on any site links!
Business Email Compromise (BEC)
As the FBI explains on their Business Email Compromise page, this sophisticated scam targets businesses and individuals who routinely perform legitimate transfer-of-funds requests, manipulating them to send money or gift cards to scammers, instead. This scam can take many forms including:
- Getting an emailed invoice that claims to be from a vendor your company regularly deals with an “updated” mailing address.
- Someone posing as a company CEO asking as assistant to purchase gift cards to send out as employee rewards or pay for an urgent need using a wire transfer.
- Hacking an employee's email account to send fake invoices to vendors or clients, tricking them into making payments to a scammer's account.
- Scammers posing as a lawyer or legal representative, often in sensitive or confidential scenarios, to pressure employees into fast-tracking unauthorized financial transactions.
- Instructions from a fake title company for wiring money for a down payment (can happen to businesses and individuals!).
To avoid Business Email Compromise (BEC), always verify emailed requests for money through a secondary communication channel, such as a phone call. It’s also important to implement strong email security measures, like multi-factor authentication, and regularly train employees on the latest phishing techniques and how to avoid them.
Insurance Fraud
“Slip and fall” fraud is still common with brick-and-mortar businesses, where scammers will attempt to sue your business and commit insurance fraud by claiming that they fell on your premises.
Other scammers will look for company vehicles and slam on their brakes in front of them, causing those vehicles to hit them in a rear-end collision. Be sure that your insurance coverages are enough to protect your business from any scam attempts like this.
Vanity Awards
While being nominated for and winning an award is wonderful, scammers have also taken advantage of businesses looking for this type of accolade. They’ll create fake “prestigious” awards and ask for money to be nominated or featured in the award show program.
If you’re not sure whether an award is genuine or not, do your research and ask other local small businesses if they’re familiar with the business supposedly running the awards.
Credit Card Processing Equipment
Scammers may offer to reduce your credit card processing fees or rent you processing equipment for a good deal, but most of these attempts are actually fraudulent attempts to get your signature on record. You may be presented with blank documents to sign, which could be used for anything the scammers want.
Always ask any salesperson for copies of documents upfront. If they refuse to do so, you can refuse to sign or say that you’ll sign them later. Further hesitation could indicate that you’re dealing with a scammer.
Business Valuation Fraud
Someone may contact you offering to buy your business and send someone out to determine the value. In some cases, they may even ask you to pay for the valuation service yourself. Many businesses have fallen into this trap thinking that they’ll be receiving a fair valuation service for their business but are in fact on the hook for a large down payment with no return after.
If you’re thinking about selling your business, do your own research and reach out to a reputable local broker who can help you find valuation services that are legitimate.
Protect Your Small Business from Scams
With new cybercrimes and scams appearing every month, it’s essential that you train your employees and stay up to date on growing threats that you should be aware of. Keep your physical assets safe from criminals, along with your sensitive information.
Report actual or suspected fraud to the Federal Trade Commission and partner with local financial institutions like CS Bank to keep your business finances secure. Merchant services offer advanced technology and security, while our cash management features provide additional security benefits. With a CS Bank card, you can protect your finances from scams wherever you are.