11/11/2020 | News release | Distributed by Public on 11/11/2020 09:41
As a small business owner, you work long and hard to make sure your business is successful. Small businesses are the most common victims of fraud at 31.8% according to the Association of Certified Fraud Examiners. That number is higher than any other business category. The truth is that small businesses are the most vulnerable because they often lack internal controls to curb the effect of scams on their bottom line. So, how can you protect your business from scammers? The first step is to identify the common red flags that accompany a scam and then educate your employees on how to spot them. Below we dive into one of the most common types - overpayment scams - and how to mitigate them.
Overpayment Scams Explained
The overpayment scam is one of the oldest tricks in the book. This occurs when a customer comes up with a reason to overpay on a bill or invoice using a check. They typically then ask you to wire back the extra money to a third party after the check is deposited. Later, the scammer's original check bounces leaving the business liable for the entire amount. They typically have a convincing story to accompany the scam, so stay engaged and ask questions.
How to Avoid Overpayment Scams
Common Red Flags to Look For With Scammers
Attempts to scam your business can come in many different forms but there are often a few common underlying tactics to keep an eye out for. It's important to have internal policies in place to combat these common red flags.
Top Tips to Protect Your Business From Overpayment Scams
Now that we've identified common red flags and examples of scams targeting small businesses, it's important to focus on how we can prevent these attempts.
Conduct Employee Training
Training and empowering your employees with information is an important first defense against scammers. Consider ordering and distributing the Federal Trade Commission's pamphlet on small business scams. Encourage coworkers to communicate internally when they spot a scam and train employees never to share password information or remit payments without proper approvals.
Verify all Invoices
Scammers' number one priority is usually gaining funds or money quickly. Be sure to verify the authenticity of all invoices before submitting payment. Never pay bills unless you know it is for items that the business actually ordered. Consider setting standard operating procedures for approving expenditures and strictly adhere to them. Pay special attention to how someone asks you to pay - if a wire transfer is requested, you can bet it's a scam.
Research Who You Are Dealing With
Be sure to do thorough research before engaging with a new company or vendor. It's always a smart idea to do an online search with the company name and the term 'scam.' Be sure to consult online reviews and pay attention to what people are saying about the vendor or company. Feel free to reach out to friends in the industry as a final verification. You can find more information and resources for small businesses at score.org, funded by the US Small Business Association (SBA).
Other Notable Scams to Be Aware of
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