The holiday season is a peak time for fraudulent activities for businesses as well as consumers. The combination of increased sales, seasonal hiring and busy holiday activities in general can leave your business vulnerable to fraud and other scams. In this blog, we will discuss ways to identify common holiday fraud targeting businesses and how to prevent them.
Common Holiday Fraud
Scams can present themselves in many ways and can be detrimental to small businesses, especially during the bustling holiday season. Knowing how to spot common types of fraud can help you protect your business and your bottom line.
Here are a few holiday scams to look out for:
- Online Listing and Advertising Scams: These scams occur when businesses are offered “free” advertising online or when they’re asked to confirm business information. Soon after, the business receives a large bill or invoice for the supposedly free service and is pressured to pay up.
- Fake Invoices and Unordered Merchandise: For businesses that deal with third-party companies for goods and services, scammers may impersonate a vendor and send your company fake invoices. Scammers hope the company will accidentally pay the bill before the invoice can be verified.
- Business and Government Impersonation Scams: Scammers may impersonate official businesses or government agencies to request payment or information on your company. For example, a conman may claim he’s part of a government agency and threaten to suspend your business or impose fines if you don’t comply with his request.
- Social Engineering Attacks, Phishing and Ransomware: Cyber-scammers may use phishing emails, social media, phone calls and text messages to trick your employees into revealing sensitive company information or to force businesses to pay a ransom as part of a computer hack.
- Counterfeit Checks and Payment Fraud: Accepting payments from customers and clients is a normal part of business, but scammers take advantage of this. Some may write you a check over the amount due, then ask that the overpayment be paid back in cash long before the check has cleared. Your credit union or bank then flags the check as counterfeit. Your business loses the money given to the scammer plus any check return fee that is issued by your financial institution.
Being aware of the types of fraud that may occur, and training employees on how to spot them, will help protect your business and reduce your losses.
Ways To Prevent Holiday Scams
Business fraud can cost you money, affect your personnel and impact operations. To ensure your business remains safe and your team informed, here are some steps you can take, according to FBI.gov.
- Educate Employees: Your frontline staff interacts with your customers and vendors daily. By educating them on social engineering tactics that fraudsters use to access sensitive information, they can use better discretion when encountering scammers. The Federal Trade Commission offers free training materials and brochures to help train workers in recognizing business scams and how to avoid them.
- Monitor Transactions: Monitor your financial statements and invoices closely to catch any suspicious transactions. Using your credit union’s online banking system lets you see day-to-day transactions so you can quickly dispute any fraudulent activity.
- Limit Access to Information: Safeguarding your financial data is essential to protecting your business from fraud. By limiting access, you can ensure that your business accounts, balances, passwords and PINs remain secure. If you believe your financial information may be compromised, contact your credit union. Also, change account passwords and replace credit cards as needed. Ask your credit union how they help protect your financial data.
- Verify Vendors and Invoices: Ensure you collaborate with vendors you trust. With potential new vendors, look up the business. The California Bizfile Online tool can help you determine a company’s legitimacy. Also, inspect all invoices to ensure the vendor information is correct and the bill is accurate.
Being proactive can help you and your business avoid becoming a victim of a scam. Training your team to identify fraudulent activity can stop it before it happens.
How Can Travis Credit Union Help
Travis Credit Union is focused on your financial wellness, which includes keeping your business and personal information secure. TCU conducts frequent audits of its internal processes and systems to ensure they meet or exceed industry standards.
Our Fighting Fraud page contains a wealth of information to help protect you and your business. TCU also provides business banking and business services that can help your business thrive and grow. Learn more at Traviscu.org.