For the past couple years, the Better Business Bureau and the Better Business Bureau Institute for Marketplace Trust have published helpful research on small business scams. This year’s survey was completed by the owners of about 1,200 small businesses throughout America. Its goal is to educate business owners and prepare them for potential issues.
As noted in the recently released 2018 report, small businesses are particularly susceptible to scams. Not only are they more likely to be targeted with repeat attacks, but they’re also less likely to report these crimes.
When asked if the risk of scams is higher today than three years ago, 67% of business owners said yes. At the same time, nearly 60% reported that their personal risk of being scammed was low. This confidence is somewhat surprising, as 43% of small businesses also said they’d probably be targeted by a scam in the next year. And 10% admitted they’d likely lose money to a scammer, citing limited information and resources as reasons for not having top-notch security measures already in place.
The five most popular crimes cited in the report were tech support scams, government agency imposter scams, directory listing and advertising scams, fake check scams, and bank/credit card company imposter scams.
Scammers use a variety of methods to reach out to small businesses. Phone calls and emails were the most common, but sketchy communications also came via postal mail, text message, and fax. And about 25% of the time, the scammer approached the business in person.
Regardless of the communication method, scammers typically use a few different approaches. First, they may pretend to be someone they’re not in order to gain the trust of a business owner. Or they may create a sense of urgency in hopes that their victim will make a hasty decision. And, finally, some discreet scammers will just try to fly under the radar.
How much do scams cost the average small business? The Better Business Bureau report shows that crimes involving bank and credit card company imposters involve a median loss of $1,400. Fake checks had a median loss of $675, while a host of other scams typically incurred losses in the $500 range.
Some of the prevention tips shared in the report include things like keeping accurate records so you can spot deceptions, never cashing checks that don’t match the estimate or contract amount, and not being afraid to ask about things that look fishy.
The good news is that well over half of the respondents reported having scam prevention measures in place. The most effective ways to defend yourself are training your staff to detect scams, limiting the number of people who place orders and pay invoices, and implementing clear procedures for checking the validity of invoices.
For a host of free resources regarding scam education and prevention, check out Scams and Your Small Business: A Guide for Business. Provided by the Federal Trade Commission, it offers valuable information on the risks facing small businesses. You can also order free copies of the guide at ftc.gov/bulkorder.