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Protect your business from fraudsters



As a small business owner, you work long and hard to make sure your business is successful. Small businesses are the most common victims of fraud with 31.8% according to the Association of Certified Fraud Examiners. That number is higher than any other business category. The truth is that small businesses are the most vulnerable because they often lack internal controls to limit the impact of fraud on their bottom line. So, how can you protect your business from fraudsters? The first step is to identify the common red flags that come with a scam and then educate your employees on how to detect them. Below we dive into one of the most common types – overpayment scams – and how to mitigate them.

Overpayment Fraud Explained

Overpayment fraud is one of the oldest tricks in the book. This occurs when a customer comes up with a reason to pay too much on an invoice or invoice with a check. They usually ask you to transfer the extra money to a third party after the check has been deposited. Later, the fraudster's original check bounces and leaves the business responsible for the entire amount. They usually have a convincing history to follow with the scam, so stay engaged and ask questions.

How to avoid overpayment fraud

  • Consider implementing a policy that does not allow money to be linked to any customer or supplier. accept a check for more than your selling price.
  • Verify important details when accepting checks for goods and services:
    • Driver's license number
  • Remember that you can always call the bank to check a customer to verify funds before a check bounces. Scammers will usually try to make you feel bad for taking the time to verify funds – do not fall for this trap!

Read, & # 39; Protect Your Business From Bitcoin Email Fraud. Red flags to look for with fraudsters

Attempts to scam your business can come in many different forms, but there are often some common underlying tactics to keep track of. It is important to have an internal policy to combat these common red flags.

  • Avoid using traceable payment methods. Fraudsters often try to get payment using unconventional methods such as bank transfer, Apple Pay, rechargeable cards or gift cards. These payment methods make it almost impossible to reverse or track the lost money when it is sent, making them ripe for fraud. Consider implementing a policy that does not allow this type of payment.
  • Avoid intimidation or fear. Scammers often want to use fear by telling you that something terrible will happen to force you to submit a quick payment without verifying the truth of their claims.
  • Always check who you are talking to. Scammers love to pretend to be someone you trust. Be sure to verify that someone is who they say they are, especially when it comes to money. It is common for fraudsters to pretend to be an authority or even a company you know.
  • Do not hurry fast. Scammers often create a false sense of urgency, especially when asking for payment for something. You should always verify and never send in payment without doing your due diligence.

Top Tips for Protecting Your Business from Overpayment Fraud

Now that we're identified common red flags and examples of scams targeting small businesses, it's important to focus on how we can prevent these attempts.

Conducting employee training

Training and providing your employees with information is an important first defense against fraudsters. Consider ordering and distributing the Federal Trade Commission & # 39 ;s Small Business Fraud Brochure. Encourage employees to communicate internally when they discover a scam and train employees to never share password information or pay payments without proper approvals.

Check All Invoices

Scammers' highest priority is usually to get money or money fast. Be sure to verify the authenticity of all invoices before submitting payment. Never pay bills unless you know it is for items that the company actually ordered. Consider setting up standard operating procedures to approve expenses and follow them strictly. Pay special attention to how someone asks you to pay – if a bank transfer is requested, you can bet that it is a scam.

Examine Who You Are Dealing With

Be sure to do thorough research before joining a new company or Salesperson. It is always a smart idea to do an online search with the company name and the term "scam". Be sure to consult reviews online and pay attention to what people are saying about the seller or the company. Feel free to contact friends in the industry as a final verification. You can find more information and resources for small businesses at score.org, funded by the US Small Business Association (SBA).

Other notable scams to be aware of

  • False Invoice Fraud . A common scam that targets small businesses is the fake invoice. Frauds create realistic fake invoices for products and services that your business is likely to use. These invoices can be for everything from website domain payments to cleaning materials. It is important to verify all invoices before repaying any payments.
  • Fraud by the Authority . Another common fraud involves fraudulently impersonating an authority. This scam often uses the threat factor that threatens to shut down your business or revoke a specific license if payment is not submitted. A common example to be aware of is when fraudsters try to get companies to buy posters in the workplace that are available for free from the US Department of Labor.
  • Phishing and online scams. The digital world has opened up many new opportunities for fraudsters. We've probably had our email or social media accounts hacked at some point. Cyber ​​fraud is trying to trick employees into giving away confidential information such as bank account numbers or passwords / login information. It is important to set up two-factor authentication on all accounts (if available) and routinely change all passwords.

Protecting Your Small Business With Social Security

Your business is your livelihood, and it's our job to do everything we can to help you protect it. By choosing Society, you not only get one of the most comprehensive plans for your business but a partner dedicated to your company's continued success.

Contact your local community agent to learn more or check out our Cyber ​​Blog series for more information. tips on how to protect your business and personal information when you are online.

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