Small Business Scams are on the Rise
Consumers aren’t the only ones who have to keep their guard up for phone calls from scammers pretending to work for the government. Small businesses increasingly are becoming targets, too. “Scams are a significant — and growing — problem for small businesses,” says Beverly Baskin, interim president and CEO of the Council of Better Business Bureaus. “Nearly two-thirds of those we surveyed said their business had been targeted by a scammer in the past three years, and many said that their businesses suffered a loss of consumer trust as a result.”
According to their latest survey, almost 70% of small business agree that they are more at risk today from business scams that just 3 years ago.
Image courtesy of the BBBAccording to the same BBB report, six of the most common scams small businesses face are:
- Bank or credit card company impostors who pretend to be verifying account information but are really trying to get access to a business’s accounts
- Government agency impostors who threaten to suspend business licenses, impose fines or take other actions if the business doesn’t pay taxes or pay other fees
- Fraudulent services that promise to offer listings in business directories, advertising services or assistance that can help a business get better internet search-engine results
- Fake invoices or supplier bills cons, in which the scammers try to coerce small businesses into paying for products they never received
- Fake checks for purchases
- Tech support scams
It's not going to happen to me!
Even though the majority of small businesses (58 percent) agree or strongly agree that their company’s risk of being scammed is low, approximately six out of 10 also agree or strongly agree that they are concerned about business scams. Out of those surveyed eight out of 10 small business owners also believe that other businesses are more at risk of scams than their own business. This mirrors results from an earlier consumer-focused study, Cracking the Invulnerability Illusion, which found that individuals overwhelmingly believe others are at greater risk than themselves. The reality is that it is important for businesses to understand that scammers can target businesses of any size and in any industry with a multitude of high-tech or low-tech schemes that are ever evolving and adapting.
Training is the most effective tool to prevent scams
Image courtesy of the BBBBeing proactive is important in risk management, but because small businesses face so many other urgent priorities, prevention efforts often end up at the bottom of the priority list.
The reality is that ongoing vigilance and training is crucial for prevention, and as industry experts will tell you that the most effective preventive measures are:
- Training your employees on how to detect and avoid scams;
- Limiting the number of people authorized to pay invoices or place orders;
- Talking about scams and sharing information in employee meetings; and
- Having clear procedures in place to make sure invoices are legitimate.
The challenge for small business is that approximately eight out of 10 respondents identified the CEO/ Owner/Partner as the most responsible for leading prevention efforts and dealing with scams if they happen. So in addition to running the company, presenting to the main clients, being sure to collect funds, and to pay employees, now the CEO/Owner is also responsible for the company phishing training and protection strategies.
The question is: Do you have the skills and resources to train and test your employees on a regular basis?