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BUSINESS FRAUD PREVENTION
6 Scams Targeting Small Businesses and How To Avoid Them
If you run a small business, know that thieves are out there waiting for opportunities to strike. In fact, 58% of data breach victims are small businesses1 and business identity theft jumped 250% in 2017.2 Small businesses are increasingly falling victim to scams, so it pays to keep up your guard.
Here are some common scams to watch out for – and what you can do to avoid them:
Criminals set themselves up as the owner of your business
Criminals can sell off your business assets, make purchases in your business’ name, and open or access bank accounts, loans, or lines of credit. All it takes is filing a false business registration form with your state. For the minimal cost of a filing fee – usually not more than $20 – a thief can file a fraudulent change of business address form for your company and file to change business officers or directors. Most states are good faith filing states. As long as basic filing requirements are met, they accept the information filed about a business at face value.
How to avoid it: Vigilance is key. Regularly review your state business filings for any changes you did not make. Enroll in any email alerts or other notifications your state may offer.
Fake emails trick you into divulging sensitive business info
You may receive a bogus email that appears to come from your bank announcing your account has been compromised. Click on a link and you’ll be taken to a site that looks just like the real thing. When you enter your bank information, credit card numbers, or passwords, the thief steals it. It’s called phishing. Phishing emails look legitimate, but they’re designed to rob you of valuable information that could compromise your business.
How to avoid it: Make sure your company’s firewalls and anti-virus software are up to date. If you have employees, train them on how to handle emails asking for confidential information, including spotting clues to fake emails or websites. Rather than clicking on a link or opening an attachment, call the institution requesting information from a phone number you know to be legitimate (not the one in the email) and validate the request. If you do fall victim to this scam, your information might end up for sale on the Dark Web without you knowing about it. A Dark Web Monitoring service, like QuickBooks Detect & Defend, scans thousands of websites, chat rooms and forums for your sensitive information.
Criminals impersonate your employees
Criminals can mimic, hack, or duplicate email addresses of employees within your company. They send an email requesting confidential information from you or other employees. Anyone duped into believing the email is legitimate may turn over financial information and other vital information about your business. This can lead to a fraudulent takeover over of your financial accounts.
How to avoid it: Make it a policy to verbally confirm requests for financial information like W-2s or bank routing numbers. Never wire money blindly. Check with the requestor directly – via the phone or in person. Ask to see invoices. Monitor bank accounts daily to make sure no unauthorized transfers are being made. Sign up for anti-fraud alerts if your bank offers them. Check out business identify theft and fraud monitoring services, like QuickBooks Detect & Defend, which often include tools to look for suspicious activity for you.
Criminals impersonate the IRS to steal your information
The IRS is one of the most feared institutions in America. A contact from them would get many people quaking in their boots. That’s why scammers will impersonate the IRS and try to intimidate you into paying for a tax bill or giving out sensitive business information.
How to avoid it: Like anything else, always check the source. If an individual claims to be from the IRS, call the IRS at 1-800-829-1040 to check on it. The IRS is methodic. Their practice is to send letters in the mail, typically not call or email you.
Criminals pose as bill collectors from your utility company
Thieves know you can’t run a business without electricity (or other utilities). You could get a call claiming your electric bill is overdue. If you don’t pay the bill immediately with a credit card, they’ll turn your power off.
How to avoid it: Don’t panic. A legitimate utility company will send written notices and give you several chances to pay. Call the service provider by the number on your most recent bill to find out if an issue actually exists.
Criminals pretend to be a contractor, then disappear
In this scam, someone approaches you offering services you may need – anything from accounting to IT help – then request a deposit or initial payment before work begins. Once you make payment, they disappear.
How to avoid it: Confirm at least two references before going into business with anyone. Vet and crosscheck any prospective contractor’s online presence to spot scammers before you sign a contract with them or hand over sensitive information.
Criminals have many ways of infiltrating your business. Knowledge is one of your best defenses in protecting your business, but it is not foolproof. It’s entirely possible to be vigilant and still fall victim to identity theft. In fact, most small businesses don’t realize their identity is stolen until their bank accounts are emptied, bill collectors come calling or credit is wrecked.
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