A recent survey revealed that 23% of small business owners and 56% of mid-market business owners have fallen victim to a cyberattack. Improvements in technology have led to an increase in the number of small business fraud cases, leaving many consumers and entrepreneurs alike with an important question: “What can we do?”
Unfortunately, when someone falls victim to this type of fraud, the effects can be devastating. According to IBM, the average cost of a data breach against businesses is $4.9 million. However, even for individuals, the cost can be significant, as scammers can empty bank accounts and steal identities, wreaking havoc on a person’s life and finances.
Although the technology and methods wrongdoers use to conduct these scams are evolving on a near-daily basis, there are certain lessons we can learn from the outcomes of these incidents. By better understanding threats and scams, we can also learn how to more effectively avoid and protect ourselves from them, preventing us from falling victim to these malicious actors in the future.
Examples of small business fraud and what you can learn from them
One of the most common scams we see online is phishing. “Phishing” is a catch-all term that describes schemes in which scammers attempt to trick consumers into revealing personal information, such as passwords or financial information.
Phishing scams can obtain this information in several ways, including deceptive emails or messages, fake invoices, and other similar tactics. One fraudster even famously perpetrated a phishing attack against the megacorporations Facebook and Google, seeking to defraud the companies out of millions of dollars.
What is the lesson to be learned from this? If companies with complex security systems and virtually limitless resources at their disposal can fall victim to these attacks, so can small companies.
Unfortunately, unsuspecting small businesses whose data and cybersecurity are compromised can have their identity hijacked by wrongdoers, allowing them to earn the trust of consumers. Because consumers believe they are interacting with a legitimate entity and not a hacker, they are more likely to trust any communications and hand over their information more easily.
Another common scam that has taken over the internet is fraudulent shopping websites. These websites present themselves as legitimate e-commerce platforms — sometimes even impersonating genuine, reputable brands by using similar names — when they’re actually just scams trying to take advantage of consumers looking for a good deal. When shopping online, it’s important to remember the golden rule: if something seems too good to be true, it probably is.
Some of these fake website scams are more annoying than they are dangerous because they sell knock-off and poor-quality products and offer little to no customer support. Consumers feel cheated out of their money because they don’t get what they think they’ve paid for.
However, some of this fraudulent activity is outright malicious. Many website scams don’t even sell an actual product and exist solely for the purpose of collecting consumers’ personal information, including their credit card details. This is why it is crucial for customers to do their due diligence before making any online purchases.
If you find yourself being the victim of fraud involving phishing or scam websites, it can be easy to feel like you are trapped without any recourse to get your money and information back. Unfortunately, many scammers employ methods such as VPNs and phone number spoofing to make it more difficult to uncover their true identity. Furthermore, many scammers operate outside of US jurisdiction, making it difficult — if not entirely impossible — to combat fraud and prosecute those responsible for it.
Anti-fraud strategies to prevent fraud and mitigate consequences
That being said, some steps can help small businesses and individuals mitigate the long-term effects of these scams on their wallets. First, it is important to immediately stop all communication with the suspected scammer to prevent them from getting access to any more of your information. Then, the most critical step you can take is to change your passwords.
If your password for one account is compromised and you use it for any other accounts, those other accounts could be at risk. Of course, this cybersecurity hazard can be avoided by using strong, proactive cybersecurity practices, including creating strong passwords that are not reused.
After taking these fraud prevention steps to protect yourself, consider how you can also help protect others. Report the suspected scam to the authorities, who can begin an investigation, as well as to reputable organizations dedicated to supporting small businesses and making consumers aware of business scams and fraud, such as the BBB and programs like Stellar Business. Although your data has already been compromised, it’s not too late to help prevent fraud before other people are affected.
Indeed, if you or your small business has been victimized by a fraud scheme, it is essential to act quickly, not only to minimize the harm the scam will cause you but also to hopefully prevent the scammer from exploiting more victims. Report small business fraud cases to Stellar Business today.