By Jane Mitchell
Small business owners must be adept at identifying and offsetting a variety of potential risks to their business, including risks of scams. The more informed you remain about potential scams that could affect your organization, the more you can do to avoid falling victim to them. Here are four tips to help you identify and avoid common business scams.
Protect yourself against credit card skimming
A business credit card is a great way to access a limited line of credit with relative ease so you can finance short-term business needs, but anyone in your organisation who uses it should be educated on potential credit card scams. Card skimmers and shimmers are small devices that steal data when a credit card is inserted into an ATM or a card reader. The stolen credit card data is then used to make fraudulent purchases.
You can minimize the risk of credit card skimming and shimming by using bank ATMs, since privately-owned ATMs are responsible for 60% of skimming incidents. Choose ATMs that are in busy, well-lit areas as these are harder for criminals to tamper with. If the card slot or keypad seem loose, don’t use the machine. You should also be sure to check your credit card statements regularly. The sooner you spot fraudulent activity and report it to your card issuer, the easier it is to get your money back.
Learn how to spot signs of phishing
Phishing is a widespread digital scam in which criminals steal sensitive data by sending fraudulent emails posing as legitimate organisations such as banks or government bodies, like the IRS. The emails contain links directing the user to a fraudulent website where their data will be stolen should they attempt to log into their account or input sensitive data. More than $54 million was lost in 2020 due to phishing, demonstrating just how easy it is to fall for this scam.
You can protect your business against phishing scams by learning about the signs of fraudulent emails, which include:
-Spelling and grammatical errors
-Unfamiliar greetings or tones
-Inconsistent domain names and email addresses
-Urgent requests or threats
-Requests for payment information or credentials
-Suspicious attachments
You should avoid clicking links or downloading attachments in suspicious emails. In fact, it’s safest to avoid clicking links in any email and type the organization’s official web address into your browser instead, especially in cases where the email requests that you log into an account or submit financial information. Make sure your staff are trained on the risks of phishing, especially those who have access to online accounts or financial data.
Avoid unusually generous business loan terms
If you’re negotiating with a lender and notice that their interest rates or terms are significantly more generous than their competitors, this is a major red flag. A common scam is to lure in business clients with irresistibly low rates of interests on loans before asking for an upfront fee. The fraudulent lender then disappears without following through on the loan. Often, businesses with subpar credit ratings are targeted because fraudsters know they have a more difficult time securing credit with low interest rates.
You can avoid falling for business lending scams by carefully researching a lending institution before making any payments. Steer clear of any loan terms that feel too good to be true, particularly if your business’s credit rating is on the unhealthy side.
Check credit reports on a regular basis
Identity theft can affect businesses as well as individuals, and a recent survey found that 79% of businesses have experienced it. Business identity theft usually occurs when someone poses as a decision maker at your organization, to take on debt or make a purchase on behalf of your business. That means your business will ultimately be responsible for footing the bill or repaying the debt.
It’s important that you regularly check your organization’s credit score so that illegitimate charges can be identified and dealt with as soon as possible. Staying on top of your commercial credit score will also help you spot accidental inaccuracies which could impact poorly on your score.
Protect and nurture your small business
When you’re vigilant about avoiding scams, you can protect your small business against serious losses and focus on nurturing its growth. Be sure to follow these tips to keep your enterprise safe.
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Jane Mitchell is a small business owner who takes pride in helping her employees to reach their full potential. She enjoys organising enriching, out-of-hours activities for her team, that allow them to build trust and forge positive colleague relationships.
