As a small business owner, you work hard to grow your business, nurture customer relationships and ensure a stable future for your employees. Unfortunately, scams and fraudulent schemes specifically targeting small businesses are becoming increasingly common, and falling victim to them can severely impact your business's finances and reputation.

As we approach International Fraud Awareness Week from November 17-23, Busey wanted to remind small business owners why it is crucial to stay vigilant and take proactive measures to safeguard their business. In this blog, we’ll discuss why scam protection is important, discuss common scams targeted at small businesses and share practical strategies to protect your business.

Why It’s Important to Protect Your Small Business from Scams

The financial impact of scams on small businesses can be devastating. Unlike larger companies, small businesses may not have the resources or dedicated departments to detect and combat fraud. Falling victim to a scam could result in significant financial losses, disrupt business operations and damage your reputation with customers, suppliers and other stakeholders.

Additionally, scam-related losses are not always easy to recover from. A small business's cash flow may be limited, and losing thousands of dollars to a fraudulent scheme can push a business into financial distress. Not only do these scams drain valuable resources, but they can also create an environment of mistrust among employees and customers if it becomes known that your business has been defrauded. Therefore, protecting your small business from scams is crucial for ensuring both its short-term stability and long-term success.

Common Scams Targeted at Small Businesses

Small businesses are prime targets for scammers because they often lack the extensive security protocols of larger companies. Here are some of the most common scams that small business owners need to watch out for:

1. Phishing Emails. Phishing is a scam where fraudsters use email to impersonate legitimate entities, such as banks, vendors or government agencies, to trick you into providing sensitive information. These emails often look convincing and may contain fake invoices, tax notices or urgent requests for payment. Once the scammers gain access to your account credentials, they can steal money, valuable business data or even infect your system with malware.

2. Fake Invoices and Overpayment Scams. In fake invoice scams, scammers send fraudulent invoices to your business for products or services you never ordered or received. They count on your busy schedule to pay the invoice without verifying its authenticity. Overpayment scams involve fraudsters sending a check for more than the agreed-upon amount, then asking you to refund the difference. The original check will bounce, leaving you with a financial loss.

3. Business Identity Theft. Business identity theft occurs when scammers steal your business's identity, including tax information and business registration numbers, to open lines of credit, apply for loans or commit other forms of financial fraud in your business's name. This can lead to serious financial problems and legal disputes, as the fraudulent activities may be attributed to your business.

4. Tech Support Scams. In tech support scams, scammers pose as IT professionals or service providers and claim that there is a problem with your company's computers or software. They convince you to provide remote access to your system or charge you for unnecessary repairs. This scam can result in stolen data, malware infections or unauthorized charges to your business.

5. Directory Listing and Advertising Scams. In this scam, fraudsters pose as directory or advertising companies, offering to list your business in an online directory or place advertisements. After your payment, however, you receive little to no service. These scammers often use high-pressure tactics to push businesses into paying for services they don’t need.

6. Vendor Compromises. Another common tactic for fraudsters is to compromise vendor email accounts and then use that account to pose as the vendor in order to trick you into changing payment details. Your payment is then sent to the fraudster rather than your vendor.

How Small Business Owners Can Protect Themselves

While scams can be difficult to avoid entirely, there are several proactive steps small business owners can take to protect their business from these threats:

1. Educate Your Employees. Your employees are your first line of defense. Regularly train your staff on how to identify phishing emails, suspicious invoices and other common scams. Teach them to verify the legitimacy of any unfamiliar requests before taking action. Having a clear process for flagging and reporting potential scams within your organization can prevent errors and keep everyone vigilant.

2. Implement Strong Cybersecurity Measures. In today’s digital landscape, cybersecurity is essential for protecting your business from scams. Learn more about how you can leverage technology to safeguard your business from fraud in our Money Matters blog.

3. Verify Invoices and Payments. Create a process for verifying all incoming invoices before making payments. Ensure that multiple employees review large transactions and that invoices match actual goods or services received. For overpayment scams, never refund overpayments without verifying that the original payment has cleared in your account.

4. Monitor Your Business Credit. Keep an eye on your business credit report to detect any unauthorized activity, such as new credit lines or loans opened in your business's name. Sign up for alerts with credit reporting agencies to be notified if anything suspicious arises. Early detection can help mitigate the damage caused by business identity theft.

5. Be Skeptical of Unsolicited Offers. Always be cautious of unsolicited offers for business services, especially those that come with high-pressure sales tactics. Before committing to any directory listing, advertising or service contracts, thoroughly research the provider and verify their legitimacy.

6. Leverage Vendor Relationships. Because fraudsters often pose as vendors to lure you into sharing bank account credentials, you should always leverage the relationships you’ve built with vendors by verifying the legitimacy of their requests over the phone.

Partner with Busey for Fraud Protection Solutions

Scammers are constantly evolving their tactics, and small businesses are a frequent target. As a small business owner, it's essential to stay informed, educate your team and implement strong security measures to protect against potential scams. By taking these proactive steps, you can reduce the risk of falling victim to fraud and ensure that your business continues to thrive in a safe and secure environment.

At Busey Bank, we understand the unique challenges that small businesses face. Our Treasury Management team brings a wealth of expertise and experience to the table, offering tailored solutions designed to enhance your organization's security. To learn more about the products and services we provide, visit busey.com/treasurymanagement.

If you are already a Busey customer, please contact your Busey Relationship Manager or Treasury Management Specialist with any questions or for additional details on our fraud protection solutions. You can also check out Busey's Fraud Prevention FAQs in order to learn more about how to protect yourself, your information and your business from fraudulent activity.