Stop your business falling prey to scams

Most of us are careful to stop our individual finances being decimated by fraud, but when it comes to our businesses it can be harder to outwit increasingly sophisticated attacks by scammers.

A recently published Home Office report showed that at least one in five businesses has fallen victim to fraud, and many do not report it to the police, leaving the true cost of scams to small businesses unknown. A scam can leave you out of pocket, and also ruin your business’ reputation if customers are affected too.

Julie Ashworth, who runs a nappy care spray company called Mummy’s Magic, says that having her Instagram account hacked by scammers led to customers being targeted by ads for Bitcoin trading and by emails purporting to be from her. Some customers who clicked on the emails ended up being hacked as well.

“I felt helpless when it happened, I felt my business was finished,” she says.

Since the hack, Ashworth has put new security in place on accounts and never replies to emails straight away and advises other business owners to take similar steps.

Knowledge is power

When it comes to avoiding scams, knowing how fraudsters work can save your money and your reputation. Cyber security expert James Bore, from Bores Consultancy says that alerting staff to odd emails and messages is vital.“The best advice is to teach employees to communicate whenever they receive a new or unusual request – verify, then trust,” he says.

What to look out for

He says he is currently seeing the following fraudulent activity against businesses.

Targeted long term fraud

These sophisticated attacks can range from a fake request for a tender to a supposed high value order that does not exist. “These are dangerous mostly because after an initial payment is extracted, it becomes easier for the fraudster to continue convincing the target to pay again,” Bore says.

Fake invoices

Staff should watch out for fake invoices as it is easy to be scammed by these.
“Fake invoices are dangerous as they’re often small enough that a startup dealing with a lot of suppliers may pay them without thinking, and procurement isn’t a mature enough process to catch them out,” Bore says.

Sophie Wright, a corporate accounting expert who runs small business financial advice group WrightCFO, adds that as well as initial invoices being fake, staff should watch out for followups. “If a supplier letter is received stating there is a change of bank details to be paid into, someone in finance should contact the supplier directly and ask them to confirm bank details,” she says. “This is a common scam, whereby supplier payments get paid into the scammer’s bank account.”

CEO Scams

With CEO fraud, a scammer poses as the boss or a senior team member and gets staff to make ‘urgent’ payments into a fraudulent account. Wright says that this type of impersonation is all too easy. “Members of the finance department can be easily found either on the business’ website, or on LinkedIn. “Finance Managers, Financial Controllers or similar positions are an easy target.”

Stopping and reporting

Being alert to scams and training staff to look out for poorly worded emails or an intimidating tone that is trying to get you to act urgently will help you to avoid scams, Wright says. “Also, avoid clicking on links, unless you know what it is”. If the worst happens, and you do fall for a business scam, you should report it immediately.

“The first thing to do is to contact your bank immediately. If you are quick enough you may be able to stop payment,” says Wright. “I have seen situations where companies did not recoup their money from their bank, and companies who have been compensated by their bank. You need to act as fast as you can.”

Bore says you may also be able to dispute any fraud on a company credit card, but there is no guarantee you will get money back, much less that the fraudsters will be caught. “Less than 1% of fraud is prosecuted in the UK. Under-resourcing of specialist fraud teams (or even their non-existence), issues with international jurisdictions, and the anonymity of modern communications make it difficult even to find culprits, let alone seek redress.”

Prevention is definitely better than cure when it comes to business fraud.

Rosie Murray-West

Rosie Murray-West is a freelance journalist covering all aspects of personal finance, as well as business, property and economics. A former correspondent, columnist and deputy editor at The Telegraph, she now writes regularly for publications including the Times, Sunday Times, Observer, Metro, Mail on Sunday, and Moneywise magazine.