Scams against small and medium-sized businesses have increased by 62% since 2020. Business entities lost over $4 billion to cybercriminals last year. Aren’t these statistics quite shocking?
Running a small business means you may need to manage several operations. But it becomes a challenge when a scammer targets you. So, learn about common small business scams. Then you can come up with strategies for preventing fraud in small business.
Major Small Business Scams
Phishing
Your employees may receive an email or SMS on their work phone or computer. The sender may pose as the representative of a well-known business. Or they may claim they are from the bank or your vendor. Then they would ask the recipient to click the attached link.
If someone clicks the link, it may direct them to a malicious website. It would collect critical information from the system. It’s also possible it may infect the work system with malware. As a result, scammers may take control of the network or steal confidential information.
Phishing scams are quite common. Retail companies receive an average of 49 malicious emails per year. But small businesses still become victims due to smart tactics by fraudsters.
Ransomware
Another common small business fraud is ransomware.
You may store business information on your computer or cloud storage. This way, your employees can access it when needed. But what if hackers take this critical data hostage? How would you manage business operations?
Scammers may initiate the attack through spam emails. Or they may infect the system when an employee visits a malicious website. Then they would demand extortion to release files. And they may delete data if you don’t give in.
Fake Vendors
Every business needs partners and vendors. For instance, your vendor may provide raw materials for product manufacturing. Or you may hire an advertising agency for marketing.
Scammers may contact you and pose as a genuine business. Then they would promote their service and trick you into paying a deposit or advance fee. But they go AWOL and don’t deliver promised work after the payment.
Law Enforcement Impostors
Scammers may also pose as law enforcement officers. They may call you and claim there are irregularities in tax returns. Or that you don’t comply with labor laws.
A common tactic is to create a sense of urgency. So, you may get worried and not think about verifying their claims.
These scammers force you into transferring an amount immediately. Also, they threaten you with legal action if you don’t comply.
How to Protect Your Business Venture from Scammers?
You don’t want to lose money to scammers. So, here are some small business fraud prevention tips for you:
- Invest in business insurance
- Train your employees about phishing attacks
- Create a secure network infrastructure
- Don’t transfer funds before verification
- Don’t share business information with people you don’t trust
Did you experience small business scams in the past? Or do you have suggestions for fellow entrepreneurs? Then we want to hear from you!
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