When you receive an email from Bank of America, titled ‘watch out for these 3 scams’ and it further goes on to highlight “Trending Scams’’ you take notice, and quickly.
Small businesses are an essential part of the American economy, making up nearly 99.9% of all U.S. businesses, according to the U.S. Small Business Administration (SBA). As of 2024, there are approximately 34.8 million small businesses in the United States. These businesses employ about 45.9% of the private-sector workforce, equating to roughly 59 million individuals. Additionally, small businesses contribute to 43.5% of the nation’s gross domestic product (GDP) and account for 39% of all private-sector payrolls. It is safe to say that small businesses play a critical role in driving innovation, providing jobs, and fostering economic growth.
However, the success and profitability of small businesses also make them prime targets for scammers. Fraudsters follow the money, but there are other factors at play as well. Many small businesses, particularly mom-and-pop shops, lack the resources for comprehensive security measures. With no dedicated IT teams or substantial budgets for cybersecurity, these businesses are often more vulnerable to attacks. This makes them attractive targets for fraudsters who know that smaller organizations are less likely to have the infrastructure to protect themselves.
Bank of America, along with other financial institutions, is committed to helping small businesses protect themselves. But it is up to each business owner to stay informed, recognize the red flags, and take proactive steps to safeguard their information and assets.
The Rising Threat of Scams Targeting Small Businesses
As the financial landscape evolves, so do the tactics employed by scammers. In recent years, scams targeting small businesses have skyrocketed. Fraudsters are finding increasingly creative ways to exploit small business owners, from phishing emails to sophisticated social engineering attacks.
Scammers are constantly refining their techniques, and even the most seasoned business owner can fall victim to these deceptive practices. However, recognizing these scams early can be the difference between safeguarding your business and losing valuable assets.
In 2024, small businesses in the U.S. faced significant financial losses due to various forms of fraud, including cyberattacks, check fraud, and emerging scams. A report by Trustpair found that 96% of small businesses were targeted by at least one fraud attempt, with 94% experiencing multiple attacks throughout the year. The average cost of a cyberattack on a small business reached $254,445, with some incidents escalating to losses as high as $7 million. Additionally, small businesses were hit hard by Business Email Compromise (BEC), suffering a collective $2.9 billion in losses, with an average loss of $50,000 per attack, according to Experian. Check fraud remained a prevalent issue, with 31% of small businesses reporting instances of check fraud, leading to significant losses, often exceeding $50,000. The rise of AI-driven scams, as reported by Nationwide, targeted 25% of small business owners with sophisticated deepfakes and impersonation techniques. Despite these mounting threats, many small businesses remain underprepared; 51% of them have no cybersecurity measures in place, and 64% are unfamiliar with cyber insurance, leaving them financially vulnerable to these escalating risks. Sources for this data include Trustpair, Experian, Nationwide, and other cybersecurity reports from 2024.
Vexing Scams to Watch Out For
- Investment Scams: “They Guaranteed a Quick Return”
What Is It?
Investment scams often promise unrealistically high returns with little or no risk. Fraudsters may pitch an investment opportunity that guarantees quick profits, often using high-pressure tactics to push business owners into acting before they have had time to think things through.
Why It Works:
The promise of quick returns plays on the natural desire for financial growth. Scammers use persuasive, often sophisticated, pitches to convince business owners to invest in fraudulent schemes, offering what appears to be a golden opportunity.
Red Flags to Watch For:
- Unrealistic promises of high returns with little risk.
- Pressure to act quickly and send money without thorough research.
- Unclear or nonexistent information about the investment opportunity.
What to Do:
- Always research investment opportunities and consult with a trusted financial advisor.
- Avoid sending money to unfamiliar or unverified sources.
- If it seems too good to be true, it likely is.
- Social Media Scams: “It Seemed Like Such a Great Deal”
What Is It?
Scammers often use social media platforms to present fake products or services at unbelievably low prices. These deals may seem irresistible, but they are designed to steal money, personal information, or both. In some cases, scammers may also pose as legitimate businesses, offering fake deals or discounts.
Why It Works:
It is a numbers game, social media gives easy access, and business owners are often targeted with seemingly legitimate ads, sponsored posts, or offers from trusted-looking accounts, making it difficult to distinguish fraudulent schemes from real deals.
Red Flags to Watch For:
- Deals that seem too good to be true, especially if they involve products, you cannot find anywhere else.
- Requests for payments via untraceable methods, like gift cards or wire transfers.
- Suspicious or poorly designed social media profiles that seem unprofessional.
What to Do:
- Always research businesses and offers thoroughly before committing to anything.
- Never share sensitive information or make purchases from unverified social media accounts.
- Be cautious about unsolicited direct messages or offers that seem out of the blue.
- Tech Support Scams: “They Needed Access to ‘Fix’ My Computer”
What Is It?
Tech support scams involve fraudsters posing as technical support agents, often claiming they need access to your computer to resolve an issue. These scammers may call, email, or pop up on your screen, offering to fix non-existent problems for a fee.
Why It Works:
Tech support scammers prey on fear and urgency, making victims believe that their devices are infected with malware or facing imminent failure. Once they gain access to your system, they can steal sensitive information or install malicious software.
Red Flags to Watch For:
- Unsolicited calls or pop-up messages claiming your computer is infected.
- Requests to gain remote access to your computer.
- Pressure to act immediately or pay fees upfront for services.
What to Do:
- Never allow unsolicited tech support access to your computer.
- Verify any tech support requests by contacting the company directly using official contact details.
- Be wary of unsolicited calls or pop-ups offering technical help.
- Imposter Scams: “I’m from Your Bank/Account Manager”
What Is It?
Imposter scams involve fraudsters impersonating trusted professionals, such as bank employees, lawyers, or tax officials. They often make unsolicited contact through phone calls, emails, or texts, claiming there is an urgent issue with your account. They pressure you to make an immediate payment or provide sensitive information, which can lead to severe financial and identity theft issues.
Why It Works:
Scammers exploit the trust business owners have in their financial institutions. By using authentic-looking communication and creating a sense of urgency, they pressure victims into acting quickly without verifying the details.
Red Flags to Watch For:
- Unsolicited communication from someone claiming to be your bank or account manager.
- Urgent requests for money or personal information.
- Poorly designed emails with grammar mistakes or suspicious links.
What to Do:
- Never send money without verifying the legitimacy of the request.
- Always contact the institution directly using known contact methods to verify any suspicious communication.
- Set up security alerts with your bank to track transactions.
- Smishing and Vishing: “Clicking Links or Answering Calls from Unknown Sources”
What Is It?
Smishing (SMS phishing) and vishing (voice phishing) are scams in which fraudsters use text messages or phone calls to trick business owners into revealing sensitive information. These scams may appear to be from trusted sources, like banks or service providers, and often ask you to provide account details or click on a malicious link.
Why It Works:
Text messages and phone calls often seem more personal and immediate than emails, making people more likely to respond. Fraudsters know that many business owners are busy and may act impulsively without thinking twice.
Red Flags to Watch For:
- Unsolicited calls or texts asking for personal or financial information.
- Links in texts or calls that direct you to unfamiliar websites.
- Requests for immediate action, such as account verification or payment.
What to Do:
- Never click links in unsolicited texts or emails.
- Verify any requests for personal or account information by contacting the company directly through official channels.
- Install mobile security software to detect and block smishing attempts.
How to Protect Your Business from Scams and Fraud
Awareness is your first line of defense. Scammers are always evolving, but by understanding their tactics and staying alert, you can fortify your business against these growing threats. The more you know, the better you can protect your hard-earned assets and keep your operations running smoothly.
Here is what you can do:
- Educate and Empower Your Team: Make sure that everyone in your organization, whether they are in accounting, sales, or tech, knows the red flags of common scams. Regular training can help them recognize phishing emails, fake investment opportunities, and impostor calls before it is too late.
- Stay Vigilant: Fraudsters rely on pressure and urgency to get quick results. Slow down and do not fall for the rush. If you receive an unsolicited offer or suspicious communication, take a step back, verify the source, and resist the urge to act immediately.
- Verify Before You Act: Whether it is a request for a financial transaction, sensitive information, or a “deal” that seems too good to be true, always double-check. Contact the business or person directly through known channels and do not rely on the information in the message you received.
But it is not just about awareness, it is about proactive action. Strengthen your cybersecurity, set up fraud alerts with your bank, use secure payment systems, and always use multi-factor authentication for online accounts. It is these small steps that can have a huge impact in reducing the risk of falling victim to fraud.
Bank of America’s Resources for Small Business Owners
To further support small businesses in protecting themselves against fraud, Bank of America offers a variety of resources and tools designed to help you stay safe. As a small business owner, you can take advantage of these services to minimize the risk of scams and ensure your business remains secure:
- Fraud Prevention Resources and Tools
- Fraud Alerts: Set up transaction alerts and account activity monitoring to stay informed of any unusual behavior on your account. This helps you act quickly if something does not look right.
- Account Protection Services: Bank of America offers security measures such as customizable alerts for large transactions, online security settings, and fraud detection tools to help protect your business.
- Cybersecurity Tools
- Bank of America provides small businesses with access to Cybersecurity Essentials, a toolkit to help identify and mitigate cybersecurity threats. This includes tips on data protection, secure online practices, and guidance on how to implement multi-factor authentication and password management.
- Business Fraud Support
- If you ever suspect fraud or a scam has targeted your business, Bank of America offers 24/7 fraud support. Their fraud team is ready to help you investigate suspicious activity and resolve potential security breaches swiftly.
- Educational Resources and Guides
- Bank of America offers comprehensive guides, articles, and webinars aimed at educating small business owners on the latest scams and fraud prevention tactics. You can access resources such as “5 Ways to Protect Your Business from Fraud” and other tailored materials to help you understand the threats facing your business.
- Dedicated Support for Fraudulent Transactions
- If your business has fallen victim to a scam or fraudulent activity, Bank of America has dedicated support staff to help you through the process of reporting and recovering from fraudulent transactions. They can guide you through the steps of investigating the issue, securing your accounts, and recovering funds if possible.
- Virtual Business Assistant
- For those who prefer a hands-on approach to security, Bank of America offers a Virtual Business Assistant, a tool that helps business owners track financial activity and access alerts or security updates.
Remember, while scammers may be persistent, your vigilance and preparedness can make your business a much harder target. Equip yourself, educate your team, and do not give scammers a chance. With the right mindset, actions, and the support of resources like those provided by Bank of America, your business can navigate the complexities of the digital age with confidence, keeping your operations safe, secure, and thriving.
