Common Business Fraud Tactics

Scammers use old and new methods to infiltrate a small business and gain access to anything that offers value. Some types of fraud in business utilize the many forms of digital business technology. Targets include CRM and CMS software, digital invoice apps, point-of-sale systems, email, and any resources where credit card numbers, bank accounts, employee and customer details, and other sensitive data are stored.

Scammers infiltrate these systems through their weakest points. Unsecured Wi-Fi, easy-to-guess passwords, default system settings, and unencrypted data create seamless points of entry for criminals.

A variety of tools enable scammers to siphon high-value data, some of which can be very sophisticated and difficult to thwart. But even the most advanced scamming methods require a starting vulnerability. Many instances of business fraud are deployed through simple methods, which only require a false sense of trust, urgency, or fear in the victim.

Financial scammers know that business owners are occupied with numerous concerns on any given day and will exploit situations in which entrepreneurs aren’t paying close attention, have their guard down, or seek easy ways to advance their business. Fake invoices and claims of unordered business supplies, advertising and business coaching scams, online review services, and equipment leasing are just a few tactics scammers launch on small businesses. These are more likely to succeed when a decision-maker is distracted or vulnerable, which can make them act rashly and miss signs that they’re not dealing with a legitimate party.

Fraud in business often relies on the same methods that target individuals. A scammer might pose as a familiar vendor, agency, or organization. Presenting a false identity can foster a sense of trust or authority, which the scammer then uses to collect information. Through simple but effective acts of misrepresentation, scammers get their victims to submit payments, download malicious software, or surrender private information with little effort.

Scammers will also mislead business owners with threats or claims that prompt urgent action through fear. In some business fraud cases, criminals may bypass business owners or higher-level managers and target employees. The scammer sends communication that appears to be from a boss or manager. With the employee believing they are simply doing what their boss asks, such as providing a password for a database update or downloading a new app for scheduling, the scammer easily infiltrates an integral system.

Effective Business Fraud Protection Methods

While there is no perfect solution for business fraud prevention—as scammers constantly work to uncover weak points—small businesses have the power to reduce the potential for attacks. In general, fraud protection and prevention are implemented by addressing two main aspects: technical vulnerabilities and human vulnerabilities.

The technical side of preventing fraud in business can seem daunting because there are now so many different tools and services for fraud detection and prevention. But, choosing and implementing these safeguards doesn’t have to be complicated. Using a cybersecurity solution and keeping it updated is an important measure. It’s also wise to ensure that anti-virus and digital security tools are properly scaled to specific operations so that all bases are covered, especially for businesses using multiple systems.

The human side of preventing business fraud is arguably the most important. While cyber security tools can spot digital activity, it’s up to business owners and employees to spot red flags and think before they submit information, click on a link, or take other actions.

Simple but effective actions, like checking URLs, email addresses, and phone numbers instead of just logos and sender names; vetting attachments and links; and regularly updating security credentials can prevent fraud by thwarting scammers at their easiest and earliest entry points. It’s also important for all members of an organization to discuss security measures, define how communication should be carried out, and what each individual can do to close gaps that scammers readily exploit.