Six Common Scams Small Business Owners Should Know About
Small business owners are in charge of hiring and managing staff, keeping the books, ordering office supplies, and balancing company accounts. Unfortunately, scammers know small business owners have a lot on their plate and may not pay close attention to their security as much as large corporations do.
Scammers are more likely to target small businesses or startups because they’re usually in the market for inexpensive help or goods. According to the Better Business Bureau (BBB), 67% of small business owners feel they’re more at risk for becoming the victim of a scam than they were three years ago.
Small businesses are usually targets for scammers because they’re known for being quick to trust outside vendors. Fifty-three percent of scammers took advantage of small businesses and startups by pretending to be someone they could trust.
Forty-nine percent of these scammers created a sense of urgency to push small business owners into agreeing to a deal or handing over sensitive information. Learn more about the most common small business scams so you can avoid being taken advantage of by ill-intentioned criminals.
1. Phishing Emails
As a small business owner, you probably receive hundreds of emails a day. With a phishing email scam, a scammer preys on business owners by sending correspondence that looks to be from a legitimate bank, credit card company, or the Internal Revenue Service (IRS).
The scammer claims you need to provide information, such as your credit card number, Social Security number, or account password, to the company to verify your identity. Once you do so, the scammer uses this information to hack your account or use your credit card.
It’s crucial to determine the validity of these emails before you hastily write back with potentially sensitive information. The IRS or a financial institution will never ask you to provide personal or payment information by email or phone. Never click on links or engage with phishing emails and contact the institution directly to report it.
2. Office Supply Scams
Scammers pose as the company you regularly order your office supplies from. They’ll make it simple and easy to “re-order” the supplies you may be low on by now, such as printer toner or paper. Once you authorize a re-order, however, the scammer will charge double what you usually pay for these supplies.
To avoid becoming the victim of this scam, verify the legitimacy of the company before agreeing to an order. Consider the office supplies you need and find reliable resources to provide these supplies. For example, you can print postage online to ensure you’re getting the stamps you pay for.
When you buy postage online, you can review the order yourself, including the order total, before confirming it. You can also print first-class postage online right when you place your order, so you won’t be charged shipping fees for these supplies.
3. False Invoices
Scammers send your company fake invoices in the hopes that you receive so many invoices from other companies, you simply don’t keep track. A scammer may create a false invoice that looks like it’s coming from an advertising company, trade organization, or office supplier. If you hastily pay the invoice without doing some research, you’ve provided the scammer with payments for service or goods you never received.
Keep accurate logs, preferably through an online ledger, of all your vendors. When you receive an invoice, avoid the mistake of quickly paying it, and ensure you received the supplies or services first. Research the vendor before you provide credit card information and if anything seems suspicious, contact the company directly to ask questions.
4. Fake Tech Support
Fake tech support scams are easy to fall for, especially if you’re not well-versed in technological terms and concepts. Scammers call your office and pretend to be from a well-known tech company. They throw around big technological terms to convince you that your computers are experiencing a security threat.
The scammer asks for your credit card information, remote access to your computer, or both. With computer access, the scammer can install malware to crash your system or steal sensitive information.
Never engage with a person who claims your computer has a problem, whether it’s by phone, email, or a pop-up window. Unsolicited computer tech security calls are likely illegitimate so hang up on anyone who claims they need to help you fix an IT problem. Never provide your password or remote access to your computer to anyone who requests it.
In an overpayment scam, a scammer sends you a check or money order from what appears to be a legitimate office supply, advertising, or tech support company. It’s explained that you overpaid for an invoice, so you may deposit this payment into your account. However, a mistake was made and the total is too much so you’ll need to wire or send the overpayment back to the company.
The check you deposit doesn’t clear in your account by the time you send payment, then it bounces. You’ve sent the supposed overpayment but never actually received payment.
Avoid being a victim of this scam by keeping track of your account balances at all times. Don’t attempt to deposit payment that comes from companies you don’t know or that looks suspicious. If a company asks you to send a refund or engage in another complicated scheme, stop communicating with them.
6. Directory Scams
Your business receives a phone call from a company that promises to update your business’s contact information in a directory listing. It seems innocent enough to provide this updated information and payment for the directory listing. As a small business owner, you’re always focused on increasing brand exposure and ensuring potential clients can easily contact you.
However, with this scam, there isn’t a directory and if there is, there are only enough copies to show the businesses that participate and are listed in the book. Meanwhile, you’re charged an exorbitant amount to be listed in this non-existent directory and the scammer may even automatically renew your directory subscription.
Be sure your company staff is educated about this potential scam. Inform your receptionist or any other employee who may answer the phone not to provide contact or payment information unless a company is verified. Before involving your business in local advertising, meet with an ad company representative, and ask to see samples and statistics that prove the validity of the advertising campaign.
As a small business owner, it’s important to protect your livelihood and brand reputation. By understanding how these common scams work and how to avoid becoming a victim, you’ll ensure your business, employees, and customers remain safe and continue to thrive.