5 Common Scams That Small Businesses Need to Avoid

Any business can fall victim to a scam. There is no shortage of potential tricks that criminals can use in order to extract money from your business illegitimately. The best way of defending yourself against these scams is to ensure that your workers are all educated and understand the most common threats they face.

Below are the most notorious scams for any small business to know about. If you can defend against these, your business will be much safer.

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1. Insurance Fraud

If your business has any physical premises or office space, then you could potentially be the victim of insurance fraud. Insurance fraud most often occurs when someone deliberately injures themselves on the business's property but stages it to look like an accident. They can then file a lawsuit and claim damages from the company.

If they are successful, it is your insurance company who will ultimately have to pay out, and then you will have to pay increased premiums.

There are other potential forms that insurance fraud can take. If your business operates a fleet of vehicles, for example, then someone could deliberately stage an accident with your car and similarly require your car insurance provider to shoulder the costs.

You should always be diligent when it comes to situations that involve your insurance company. Keeping accurate records, including surveillance footage of business premises, will make things more comfortable if you do have to deal with your insurance company, and it will deter false claims.

2. Supplier Scams

If you order any kind of supplies for your office, then you could fall victim to a man-in-the-middle supplier scam. This is when a criminal impersonates one of your suppliers and send you a fraudulent invoice. This is often combined with unauthorized access to data that enables criminals to convincingly fake these documents, for example, by including genuine recent transactions.

In order to reduce the risk of falling victim to supplier scams, make sure that you check the details on every invoice that you pay. If the details have unexpectedly changed, then you should contact the supplier immediately to verify that the request is genuine.

3. Phishing Attacks

Phishing attacks involve sending fraudulent emails to your employees that are designed to trick them into handing over their account details. This is usually achieved by redirecting the victim to a fake login screen for a service that they genuinely use, in this case, it is usually your business's cloud portal. Employees think that they are logging in, but they are actually entering the login details for cybercriminals to steal.

A successful phishing attack can completely undermine the rest of your network security and make it impossible to defend yourself effectively.

Make sure that you tell your employees always to be wary of emails from unfamiliar addresses, or emails that contain attachments or links that they are not expecting to receive.

4. Utilities Fraud

All businesses are dependent upon utilities to function in some form or another. From electricity to water to gas, businesses need utility suppliers to provide them with these essentials. Scammers will sometimes call a business impersonating a utility company and insisting that there are outstanding payments. These scammers are relying on the essential nature of utilities to businesses, and their unwillingness to lose access to them, to motivate them to hand over money without thinking.

Legitimate utility businesses will send you several notices before they make any threat to cut off your service. You can identify legitimate utility businesses by using Utility Bidder, an online service that enables you to compare business utility prices. Legitimate utility businesses will not only treat your business better, but they will also protect your data, making it less likely that attackers will be able to perform a man-in-the-middle attack.

5. Bank Account Seizures

If an attacker is able to launch a successful phishing attack against your business, then they could conceivably gain access to bank account details and other sensitive financial data. The potential impacts of this are enormous, both for your business and for your customers.

When this happens, it can be problematic reclaiming any money if thieves were able to access the account using proper usernames and passwords. It is, therefore, essential that all your staff understand how to recognize a phishing attack.

Scams and fraud are issues that affect businesses of all types and sizes. No business is immune from a con artist's desire to make money as easily as possible. As your business grows, it will become more complicated and there will be an increasing number of potential points of failure. It is, therefore, important that you train your workers on how to spot the most common scams so that they can avoid and report them when they occur.

 

Small Business Scams: How To Report Them

Warn your family and friends about the small business scams above by sharing this article on social media using the buttons provided. You can also officially report the scammers to the Federal Trade Commission using the link below:

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