Watch for These Small Business Fraud Schemes

August 16, 2023

While it may seem that most fraud scams are repetitive and familiar, fraudsters are always devising new ways to cheat businesses. Here are some recent scams – and how your company can avoid them.

Social Media Shakedowns

Scam: Self-proclaimed social media influencers want complimentary meals and beverages from restaurants and bars in exchange for “free” marketing on platforms such as TikTok and Instagram. Some unethical influencers rake in large sums while failing to post anything about the businesses. Others collect money for “exposure packages” (which promise a certain number of postings on multiple platforms) but never deliver.

Solution: If an influencer approaches you about a complimentary meal (or other free items or services), double-check the influencer’s number of followers and examine how they promote local companies on social media. Even better, have influencers sign a basic contract outlining what you agree to offer, what they intend to do in return, and for how long. Ask your attorney to help you create a basic influencer agreement that you can use and reuse.

Impersonating a Company

Scam: You’ve likely heard about the dangers of phishing and have urged staff not to click on links in questionable emails. But what if a fraudster is committing a phishing scam using your company’s name, trademarks, and other intellectual property? For example, a perpetrator could create a website that looks similar to yours and use it to infect visitors with malware.

Solution: If you discover that a con artist is impersonating your organization, quickly notify customers, vendors, and other stakeholders via email and social media platforms. Warn them about bogus messages and remind them that you would never request critical information (like credit card details) by email. Then, file a complaint with the Internet Crime Complaint Center (ic3.gov).

BEC (Business Email Compromise)

Scam: BEC fraud is a well-known practice in which scammers acting as supervisors or vendors email employees. Though not new, it has become increasingly common since the pandemic, as more employees began working remotely. Perpetrators ask recipients to initiate financial transactions, such as moving money to an external account, and tend to stress urgency. Employees may feel pressured to transfer money without taking time to check the request with the real person (as they might be able to do easily if they shared office space) – resulting in the thieves successfully stealing from the company.

Solution: Educate employees about BEC fraud. Instruct them to never consider a financial transaction request legitimate until they’ve personally spoken with the supposed sender (via a phone conversation/video chat initiated by the employee or face-to-face).

Dangers Everywhere

Your company is frequently threatened by fraud, and new schemes can materialize from unexpected places. Contact us for help with developing policies and procedures that reduce your risk.