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The Association of Certified Fraud Examiners reported that U.S. businesses will lose an average of five percent of their gross revenues to fraud. Why does this happen? The study found that it was primarily caused by a lack of internal control from the targeted business.
When you own a small business, all of your work goes into running it. It’s hard to keep track of everything that’s going on, especially when there are employees or running certain parts that you are not.
Sometimes people take advantage of small businesses through common scams that can completely change the reputation of your organization. Once your reputation is hit, it’s not a good look for any entity. What’s the best way to protect yourself in this situation?
Learn about the scams that target businesses. Pass that information on to whoever in your organization that needs to hear it. Once you’ve figured out the tactics of scammers, it’s time to assess different ways to protect the business.
While commercial crime insurance and cyber insurance helps when you've already fallen victim to a scam, it’s always good to plan ahead to avoid these targeted attacks in the first place. If you run a small business, here are some common scams to be wary of, via the Federal Trade Commission (FTC).
Fake Invoices, Unordered Office Supplies and Other Products
Creating fake invoices and trying to collect payment on them is one of the most common schemes that targets small businesses. Those that make the invoices are pretty much banking on the fact that whoever pays your invoices won’t double check to see if the invoice is actually legitimate.
Scammers will sometimes even send supplies that weren’t even ordered and demand payment for them. They’ll even produce “proof” that the invoice is legitimate. When someone is that pushy for payment, always be wary of where your money ends up.
Directory Listing and Advertising Scams
Sometimes scammers will set up dummy companies in order to get money from others. This includes offering advertising or listing in a directory that might not actually exist.
Utility Company, Government Agency and Tech Support Scams
Scammers will often pretend to be someone important and threaten things in order to get their point across. Sometimes they will say they are turning off the electricity unless this certain amount is paid.
Sometimes it has to do with government agencies. With technology, scammers can hack a computer and make you think that you need better security. All of these scams are just ways to alarm someone into giving up money. It’s all about the fear of getting in trouble, losing data or getting something vital shut off.
For these scams, do not act until you have contacted the relevant organization and confirmed that these messages are coming from someone who does indeed vouch for them.
Cyber Scammers and Ransomware, Phishing and Social Engineering
Usually done through phishing emails, cyber scammers are able to get access to sensitive information and use it as leverage in order to get more money out of their victims.
Business Promotion and Coaching Scams
Just like with the advertising scheme, a scammer can promise business promotion and coaching that’s meant to benefit your company. They’ll demand payment and never fulfill their role to help promote your business.
Changing Online Reviews
If someone promises to change your negative online reviews or maybe even flood your with positive ones for pay, definitely consider it a scam. Posting fake reviews is considered illegal, meaning there’s no reason for anyone to contact your business promising a better online presence.
Fake Check, Credit Card Processing and Equipment Leasing Scams
If a scammer overpays with a check and asks for the rest to be sent to a third-party, consider that a scam. And if someone offers you lower credit card transaction rates, also consider it suspicious.
About Axis Insurance
At Axis Insurance Services, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn more about our solutions, contact us at (201) 847-9175 to speak with one of our professionals.