Growing your business requires dedication, strategy and smart financial management. Unfortunately, it can also make you a target for sophisticated scams. Fraudsters are not only looking to target your personal finances but also your employees’ and customers’ financial information.
According to the Better Business Bureau, more than 60% of businesses dealt with scammers in 2024. Popular scams included impersonation of vendors or documents, fake consultants and phony advertisements. These criminals reach into every aspect of a business, putting each employee and executive at risk of falling for a scammer’s ruse.
Imposter Scams
All types of fraud don’t look or act alike. Imposter scams can include:
• Phony Invoices: Scammers create documents that look like legitimate bills for products or services you never ordered. According to the Federal Trade Commission (FTC), these individuals target smaller businesses hoping busy staff will overlook discrepancies and pay the invoice without proper verification.
• Vendor Fraud: Others pretend to be a vendor, often spoofing a real one, but offering deeply discounted products. They can go as far as creating a seemingly legitimate website and sending over documentation. But when it is time to deliver the product, the scammer is nowhere to be found.
• Phony Government or Business Calls: Scams of this nature try to use your knowledge to their advantage. They pretend to be a government agency, utility company or technology company. These can vary from claiming you are late for a bill, demanding you pay immediately or threatening you’ll lose grants, a trademark or your website if you don’t pay a fee.
Equipment Scams
As you work to automate your business, scammers use this to their advantage. A common fraud targeting small businesses focuses on credit card processing and equipment leasing. The fraudster will promise lower rates for credit card transactions or leasing equipment. Check the fine print. Often, the people behind the sales will use half-truths or lies to get your business, and then, change the terms of the agreement.
Another trick they use, which you should never do, is to have you sign a blank document. Instead, ask for copies of all fully complete documents before you sign. If they refuse or try to put it off, that could be a sign of a scam.
Advertising and Growth Scams
A business coach is a great way to learn about the ins and outs of business management, especially if you are just starting out, but be wary before you hire someone. Some rely on fake testimonials, videos or seminars. If they promise you quick success and high profits, or anything else that’s too good to be true, it likely is.
Growing your business through online advertising is a common marketing tool but know what you are paying for. Some scammers try to trick you into paying for nonexistent ads or a listing in a phony business directory. The scammer may initially offer an initial “free” listing to gather contact information, and then surprise you with a large, unexpected bill.
Another way they target you as you are through online reviews. Scammers may promise to remove negative reviews, post fake positive ones or inflate your business rating. These criminals often prey on vulnerable businesses with few reviews and who are willing to pay to boost their reputation.
Protecting Your Business
Recognizing these tactics is crucial, but knowledge alone isn’t enough. Protective measures are key. Safeguarding your business means protecting your livelihood and future. Staying vigilant and regularly updating yourself on fraud prevention practices should be part of your financial management routine.
• Identify Red Flags: One thing many scams have in common is a sense of urgency. If you get a call, email or visit from someone claiming that you need to act now, it’s a red flag. The same can be said of something that is too good to be true. Before moving forward, do your own research to verify legitimacy.
• Implement Strict Invoice Checks: Require all invoices to be approved by multiple parties and verify that the goods or services were actually received. As the FTC advises, make sure procedures are clear for approving purchases and invoices, and ask your staff to check all invoices closely.
• Be Skeptical of Unsolicited Offers: Carefully examine any unsolicited offers for online listings or advertising and verify the legitimacy of the provider before committing to payment.
• Vet Vendors Thoroughly: Conduct thorough due diligence by researching businesses or coaching programs, checking their credentials and looking for independent reviews. Avoid anyone that guarantees unrealistic results.
What to Do If You’re a Victim
Even with the best safeguards in place, scams can still happen. Knowing how to respond swiftly and effectively can minimize damage.
• Report the Scam: If you suspect that your business has been the target of one of these scams, file a complaint with the FTC at www.ReportFraud.ftc.gov and the FBI’s Internet Crime Center at IC3.gov.
• Contact Your Bank Immediately: Alert your bank to any suspicious transactions or unauthorized activity on your account. If you’re operating a small business, check out these tips.
• Monitor Your Business Credit Report: Closely monitor your business credit report for any signs of fraudulent activity.
About Robert Eastwood
Robert Eastwood is Senior Vice President, Chief Information Security Officer at WSFS Bank. He has more than 25 years of experience in the information security field, including 20 years at WSFS, most recently as Vice President, Information Security Officer, where he developed and executed a multi-year strategic plan for Information Security. He also holds a number of professional certifications and memberships in the Information Security, IT and financial services fields.
About Carl Buchholz
Carl Buchholz is Vice President, Small Business Association Lending Franchise Relationship Manager at WSFS Bank. He currently serves on the board of the Great Valley School District Education Foundation and the Still Strong Foundation. He also serves on the Young Professionals Committee of the Bringing Hope Home Foundation.
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