Top 10 Scams Targeting Small Businesses


As long as businesses have existed there have also been criminals trying to take advantage of them.

While scams impact every business, regardless of its size, they are especially problematic for small businesses as they often lack the cyber security support or established accounting processes of larger companies.

In addition, with technology constantly advancing, methods of scamming are also evolving, making it increasingly difficult to put a stop to these thieves.

At Genie, we believe that knowledge can help protect us against scams. If you own or work for a small business, be sure to stay informed about these common scams and report them if your business is targeted.


Common small business scams:


1. Bank Account Takeover

"The most common and dangerous scam for small businesses is account takeover," according to Michael Benardo, Chief of the FDIC's Cyber-Fraud and Financial Crimes Section. "By sending fake emails and using fake Websites to deliver malicious software, such as keystroke loggers, fraudsters may be able to obtain the IDs and passwords for online bank accounts and then make withdrawals from accounts” (FDIC, 2022).

2. Phony Invoices

Companies receive many business expense bills each month which scammers try to take advantage of by slipping in their own phony invoices. These fake invoices request payment for products or services that the company never ordered or received. These scammers often research your company beforehand to find out who your suppliers are in order to impersonate them. According to the Better Business Bureau, “The most common [invoice] scams involve office supplies, website or domain hosting services, and directory listings. Often, if you look closely, you’ll see fine print that identifies the bill as a solicitation. Generally, the amount is small enough to not initially raise a red flag” (BBB, 2022).

3. Directory Scams

This is one of the longest running scams to target small businesses. It involves scammers attempting to trick businesses into paying huge amounts of money for faulty listings and ad space. Usually these con artists will convince businesses that they are a part of a legitimate directory, like the Yellow Pages, but in reality the directory doesn't actually exist or they don't distribute it amongst your customer base.

4. Stolen Brand Scams

Scammers often pretend to be a legitimate company in order to trick consumers. Scammers set up fake websites and “hijack” your company name and address. They may also use brand hijacking - the blatant copying and misuse of company logos and website content - to impersonate a business and deceive unsuspecting visitors. In this con, the company doesn’t necessarily lose money. However, their reputation is tarnished when angry customers who were ripped off by scammers think the real company is responsible (InBusiness, 2022)

5. Fake Charity Donations

Most businesses are regularly asked to donate funds to charitable causes. While many requests are legitimate, every year small businesses become victims of fraudulent or deceptive charitable solicitation schemes.

You can read more about how to tell the signs of a fake charity scam using a very relevant example of fake donations to victims of the war in Ukraine: https://www.lifesgenie.com/post/war-in-ukraine-creates-rise-in-charity-scams

6. Phishing Scams

Phishing scams attempt to steal sensitive information about your business. Phishing emails appear to be from a legitimate sender, but they’re actually designed to capture valuable data like bank information, passwords, or credit card numbers. You may, for example, receive a message, supposedly from your bank, claiming that your online account has been compromised, or from the IRS saying you’re being audited. Clicking on the link inside the email will take you to a website that is often an exact copy of the legitimate site, where you enter information allowing the scammer to steal from you (BBB, 2022)..

You can read about the 9 questions to detect phishing emails here: https://www.lifesgenie.com/post/9-questions-email-scams

7. Office Supply Scams

Businesses targeted by these scams receive an unexpected call or email from someone claiming to represent the company’s regular supplier. According to InCorp, (a leading registered agent service provider), the scammer will ‘"remind" you that it's time to re-order whatever he's selling (copier toner and paper are especially popular). If you are tricked into agreeing, you'll soon receive an order of overpriced merchandise”. In some cases, the merchandise they are selling doesn't even exist in the first place.

Another type of office supply scam consists of scammers “sending merchandise you never ordered, and then harassing you for non-payment” (InCorp, 2022). Do not worry if this happens as, according to the Federal Trade Commission, you have the legal right to keep unordered merchandise as a "free gift” (FTC, 2022).

8. Vanity Award Scams

Another common scheme that a lot of small businesses fall victim to is scams that claim they've been selected to be in an allegedly "prestigious" publication featuring other exceptional companies or individuals in their field. These scammers then mention that there are hundreds of dollars in “expenses” involved in order to accept this award “to cover printing costs or to order multiple books for family and friends” (InCorp, 2022).

9. Overpayment Scams

In this scam, the person you are doing business with sends you a check for more than the amount they owe you. Then, they tell you to deposit it, keep the correct amount for your own compensation, and wire the rest back. Eventually, the check they provide you with bounces, and you’re stuck, responsible for the full amount, including what you wired to the scammer (InCorp, 2022).

10. Valuation Fraud


Business owners may receive a fax or email from a "business broker" offering to find a buyer interested in purchasing their company. If you take the bait, they’ll send someone out to give you a proposal and take a large down payment for the valuation, but that's the last you’ll hear from this fake company (InCorp, 2022).

Tips to Avoid Small Business Scams

(According to the Better Business Bureau)

  • Keep good records. Keep documentation of all orders and purchases. This will help you to detect bogus accounts and invoices.

  • When accepting an award, always research the organization offering the “award.”

  • Be sure to monitor your bank accounts daily to make sure no unauthorized electronic transfers are being made. Ask your bank about anti-fraud alerts they may offer.

  • Be extra careful with payment procedures. Establish payment authorization procedures, including a multi-person approval process for transactions above a certain dollar threshold.

  • Avoid some payment methods when possible. Wire transfers, prepaid debit cards and gift cards are scammers’ preferred methods of payment. Always confirm that any request for payment with untraceable methods such as these are verified by a trusted source.

  • Make sure your firewalls and anti-virus software are up to date, and if you receive an email asking for confidential information, instead of clicking on a link or opening an attachment, call the sender directly (from a phone number you know is correct) to verify the legitimacy of the email.

  • Be wary of unsolicited messages and don’t click on links. Instead, hover over the link with your cursor to see the real address.

  • Double check vendors. Make sure that the business billing you is a business you’re familiar with and normally do business with. If not, question it. Research the name of the person you speak with, the company name, address, phone and website.

  • Be careful what information you share. Do not give out information about your business unless you know what the information will be used for. Never provide personal information or financial details to anyone you don’t know.

  • If you're thinking of selling your business, contact a reputable business broker and make sure to get references before making payment.

  • Spread the word. Remember that knowledge is power - If you and your employees are aware about various scams, you’ll be more likely to spot them.


PROTECT YOURSELF FROM SCAMS WITH GENIE:

Genie prevents any unwanted phone calls from harassing marketers and scammers on your mobile device. He can quickly identify complex patterns in scam calls to determine the true intent of any given call better than any existing solution.

HOW GENIE WORKS TO PROTECT YOU:

Genie is your artificial intelligence assistant who evaluates all incoming calls, politely chats with the caller, and lets you know who's calling and why. Genie gives you the power to reclaim your phone by filtering out all scammers and harassing spammers.

1. Incoming calls from known contacts?

Genie doesn’t intervene, letting them straight through.


2. Incoming calls from known scammers or telemarketers?

Genie blocks them automatically, so you don't get bothered.


3. Incoming calls from anyone else? (e.g. local delivery person, charity, or doctor)

Genie screens them, notifies you who’s calling and why, and allows you to decide who gets through.

Try Genie for yourself

If you're interested in becoming a Genie Early Access user, click here to apply: https://www.lifesgenie.com/join-genie-beta-program

Please share this information to keep others protected from these scams!

Stay safe

Genie Team