Business owners, is your firm vulnerable to scams? The amount lost to fraud has increased by 35%
As a business owner, have you thought about how vulnerable your firm is to scams? The pandemic has led to many businesses changing how they operate, and fraudsters are taking advantage.
According to the latest UK Finance figures, covering the first half of 2021, fraud against businesses has increased by 35% in just a year.
UK Finance has warned that small- and medium-sized enterprises (SMEs) must be alert to scams. The figures show that £59.2 million was lost to scams in six months. This figure represents the reported losses and, as some may go unnoticed or unreported, it could just be the tip of the iceberg.
A survey shows just how frequently businesses are being targeted by scammers:
8 in 10 SMEs have received an unsolicited text or email requesting money.
64% of SMEs have received an unsolicited phone call.
While in many cases businesses will spot a scam, fraudsters are becoming increasingly sophisticated. So, during busy periods, it can be easier than you think to overlook the red flags. Indeed, 1 in 6 SMEs admitted they had not challenged an unsolicited call requesting money or personal information.
The 2 most common fraud tactics used against businesses
There are many tactics that fraudsters will use to try and deceive businesses. According to UK Finance, the two most common scams targeting SMEs are:
CEO scam: This is when a scammer will contact business employees claiming to be the CEO or another senior manager. They may request that an urgent payment be made, account details are updated, or ask for sensitive information like passwords. Spoofing technology or hacking can make it seem as though scam emails are genuine or that phone calls are coming from a number the victim recognises.
Invoice and mandate scams: As a business, you’ll deal with different suppliers and other firms you must pay. In this scam, a criminal will pose as one of these suppliers and try to convince you that their bank details have changed. It can result in you paying the scammer rather than your usual supplier.
Martin McTague, the national vice-chair of policy and advocacy at the Federation of Small Businesses, said: “Business crime is a serious issue for small firms right across the country, with fraud being one of the key problems at hand and one that has only been accelerated due to the increase in online trading and e-commerce during the pandemic.
“Small businesses face almost 4 million cases of cybercrime each year, predominantly focused on malware and fraudulent payments, so the need for vigilance has never been more important.”
5 practical ways you can protect your business from scams
1. Take some time to think
If something seems out of the ordinary, take a step back and give yourself time to think about it. Sometimes, just a few minutes of space can help you identify red flags you may otherwise miss.
2. Verify all details directly with other companies or individuals
If you have received an unusual communication from anyone, whether internally or externally, a few minutes to verify it could protect your money.
Don’t reply to the email or continue a phone conversation. Instead, go directly to the business or individual you’d usually talk to. A genuine supplier or business partner will understand why you may have concerns.
3. Have a clear payment procedure
Scams can occur if there are misunderstandings within your business. Setting out clear procedures and details of what should happen if anyone spots something unusual can reduce the risk of your firm falling victim to a scam.
4. Regularly review your accounts
It is possible for scams to go unnoticed at first, for example, if you believe payments to suppliers have been correctly made. Reviewing your accounts regularly can help flag up potential issues quickly.
5. Ensure employees are alert to scams
In your business, there may be other people that are responsible for making payments or managing finances. As a result, they may also be targeted by scammers, so it’s important they are aware of the potential risks and understand the procedures you have set out.
If you have been scammed or have concerns about communication you’ve received, you should immediately contact Action Fraud and your business bank. If a scam has occurred, reporting it quickly could mean the police are able to recover the funds.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.