Small businesses can be victim to hackers and thieves just like individuals. The best way to avoid business scams is to stay in the know. Read this.
Could your company be the next target for small business scams? It happens more often than you might think.
Small businesses are the most common target for fraud. It’s estimated that businesses in the U.S. lose an average of 5% of gross revenue to fraud. Even more alarming is the fact that small businesses experience a higher frequency of fraud than larger corporations.
Unfortunately, many small businesses do not have the resources or the tools to protect themselves against scammers. And, as technology evolves, so do tactics in thievery and dishonesty to zap your hard-earned profits.
Truth be told, small business scams aren’t always easy to recognize. If you want your best chance of avoiding these illicit situations, it’s best to stay informed.
Protect yourself by avoiding these 10 common small businesses scams so you don’t become their next victim:
#1 – Online Directory Scams
Online business directories can be powerful lead tools, which is likely why they seem so attractive to business scams.
In an online directory scam, fraudulent companies will contact small businesses and offer to place them in an online directory for a fee. They’ll say their directories will bring them more traffic and quality leads, thus becoming more valuable than the price they pay for the listing.
It sounds tempting, but it’s likely unrealistic.
For example, the FTC banned the company Fair Guide for its shady business scams regarding online directory listings. Unfortunately, this ban was enacted only after the company costs US businesses millions of dollars in fraud.
#2 – IRS Fraud
Consumers and small businesses alike have been plagued by fraudulent calls that tour the IRS name.
Businesses have reported receiving hounding phone calls stating they owe money to the IRS. It’s a legitimate fear among small businesses, but there are a few telltale signs to see if the phone call is worth paying attention to:
First, you should know that the IRS will reach out via US Mail first if they have an issue with your taxes.
Second, the IRS will never ask for your social security number or credit card information over the phone.
The biggest giveaway is how they’re asking you to pay for your “mistake.” Gift cards, green dot cards, or wire transfers are automatic red flags.
#3 – Tech Support Fraud
Scammers will often pose as tech support professionals offering to help fix a problem with your computer. They may reach out to your personnel and request computer access to remedy the situation.
The only problem? There is no problem to fix.
Some scammers are adding a new spin by claiming they’re from the Global Privacy Enforcement Network. They’ll say whatever it takes to gain entry into your system, whether it’s claiming your email has been hacked or threatening legal action.
It’s in your best interest to train employees never to allow outside access to your computers. Doing so puts your data and other sensitive information at risk.
#4 – Timeshare Scams
Timeshare scams occur when companies list properties that don’t exist, aren’t for rent, or look drastically different than the picture.
Small business owners may be contacted by such companies who offer “special deals” to businesses. They might pitch the idea of offering a free timeshare stay to your employees.
To motivate you, they may hint that others are extremely interested in the property. They hope this will cause you to pay up before others have the chance.
If you fall into this scam, companies like Aconsumercredit help you cancel a timeshare contract at a fee. It’s certainly better than continuing to pay for a property you’ll never truly own.
#5 – Check Fraud
Everyone loves getting checks in the mail, but cashing the wrong one could cost you dearly.
In check scams, a business will receive an invoice or other documents along with a check. The check usually looks like a refund or rebate.
Before you cash any such check, it’s best to check the accompanying document for what the check is actually for. Cashing it could seal you into some sort of service agreement, loan, or another undesirable situation.
Getting out of these scenarios are much complicated than getting into them.
#6 – Ransomware
Ransomware is every small business’s nightmare. This computer virus not only attacks your system, but also holds it hostage until you pay a fee.
Global ransomware damages totaled $325 million in 2015, and that cost was predicted to hit over $5 billion in 2017.
Businesses of all sizes are at risk for ransomware attacks, from hospitals to hotels to general consumers.
Small businesses can help to avert this disaster by training employees on how to manage data and email on computers. They should take caution when opening attachments, clicking links, or opening suspicious email.
Nothing is foolproof. Ensuring you’ve backed up your data can help you recover from a ransomware attack, but such a situation will still cost you.
#7 – Funding Kits
Small business scams regarding funding are rampant. When a business is offered the chance to gain additional financial support for their ventures, it’s hard not to take advantage.
But oftentimes, these “funding kits” will cost you money up front to receive information about grants, loans, and “free” money for your business.
In some cases, you never receive the funding kit once you’ve paid for it. In other cases, the information you receive could have been found online for free.
#8 – Charity Fraud
There are thousands of charities and nonprofits in the US, so it’s not surprising if one contacts you that you’ve never heard of. But not all charities can be trusted.
This scam now extends to families and individuals asking for money to cover medical costs, funeral expenses, or money for tragedy victims. They’ll post fake accounts on social media using stolen or altered photos. They’ll create a phony story to lure people into donating money.
To avoid these scams, only donate to charities or people you’re familiar with, especially if you’re asking your clients to support your selected cause.
Closing Thoughts on Business Scams
All it takes is just one scam to crush your profits. Staying up-to-date on common small businesses scams can keep you on the defense and in the game. You never know where they’ll strike next.
For more helpful insights into running a better business, visit our online resources.