How your SMB can avoid being scammed + 5 types of scams to watch out for

Hackers utilize false promises and disinformation to mislead individuals into money scams and identity theft. They are skilled in manipulating circumstances to appear credible. Read on to learn how to recognize typical scams and the precautions you can take to protect yourself.

Why Do Scammers Target Small Business Owners?

Scammers zero in on local entrepreneurs because they are easier targets due to their limited means and time. Small business owners are more susceptible to fraud, as they are disguised as schemes that promise easy money and quick fixes.

The FBI estimated a $24.2 billion loss in 2021 due to fraud in small organizations, which is 59% higher than the previous year.

Fraudulent individuals also rely on small company owners being less knowledgeable about some areas of running a firm, such as financial rules or cybersecurity, rendering them more open to scams to use these gaps. Smaller businesses are less likely to disclose fraud out of fear for their own reputations or the cost of legal action.

How Can I Spot a Scam?

Since scams proliferate across multiple mediums, keeping a close eye on any suspicious activity to avoid financial distress has become vital. 

Be cautious of unsolicited calls or messages that promise unrealistic advantages or demand the exchange of sensitive information. They also use high-pressure strategies like creating a sense of urgency in their communication, depicting that the offer is for a limited time. 

How Can I Prevent Scams?

Staying vigilant is the key to protecting yourself from falling prey to scams. One of the most crucial things is to exercise extreme caution when responding to emails or phone conversations they did not initiate. Criminals frequently employ social engineering strategies to coerce victims into giving over personal information such as passwords, credit card numbers, social security numbers, etc. These strategies can help people avoid disclosing personal information in response to suspicious solicitations.

Additionally, verifying a website’s credibility before entering personal information is another technique to avoid falling victim to a scam. Swindlers frequently utilize bogus but convincing websites to steal personal information from unsuspecting victims. People can lessen their chances of falling for these scams by taking precautions, including double-checking the URL, looking for security signs, and confirming the site with the relevant authority.

For additional security, it is recommended to use complex and different passwords for each online account. Passwords must be at least 12 characters long and a combination of alphabets, numeric digits, and special characters. A typical way people leave themselves open to fraud is by reusing passwords across different accounts.

Lastly, monitor your financial accounts and credit card bills to catch any signs of fraud. As a result, victims of scams can mitigate their losses by identifying questionable charges earlier.

5 Types of Scams to Watch Out For

Below are five common types of social engineering and phishing scams that everyone should be aware of:

Banking Scams

Banking scams have become increasingly common with the progressing technology, as scammers now use smart tactics to gain access to sensitive financial information. Phishing is a common banking scam where scammers send fake emails or text messages that appear to be from a legitimate financial institution, requesting personal information. 

To protect yourself from financial scams, it’s important to be vigilant when handling emails or text messages. Avoid clicking on links or downloading attachments from suspicious sources. Instead, use your financial institution’s website or mobile app to access your account. Never disclose personal or financial information unless you’re certain the request is legitimate.

Another effective way to prevent banking scams is to use two-factor authentication. This provides users with a code on their phone or alternate email to access the account. This additional layer of security can prevent scammers from accessing accounts even if they have the victim’s login credentials.

Beneficiary Scam

Many of us have received a “Nigerian Prince” email where royalty requests a speedy monetary transfer and offers to pay you a large sum in return for helping him relocate his fortune abroad. 

Most of these emails can also originate from a “businessman” who claims to need help relocating his fortune and offers a percentage of the profits in exchange for your assistance. The sender provides sufficient information to make the offer credible. 

Falling for these scams could lead to you being responsible for paying for fraudulent expenses designed to take your money. It’s important to look for signs that indicate the situation may not be genuine. Be wary of anything that seems too good to be true, especially online. You can often tell a scam email by its poor language and spelling and when the return address doesn’t match the senders.

Student Loan Scam

Student loan scams are on the rise and have a disastrous effect on the finances of both current students and recent grads. Scammers often charge students enormous fees while providing them with little to no genuine support when they promise to consolidate or restructure their student debts. These scams entail anything from simple financial information theft to outright robbery of government loan money.

Never respond to an unsolicited email or a phone call requesting personal or financial information. Always research a company or service before paying for it or giving out personal details. Another preventative measure is knowing the red flags indicating potential student loan fraud. 

Students should exercise caution when dealing with firms that claim instant debt relief, demand up-front payments, or access to their federal student assistance PIN. Students should always research before engaging with any educational loan firm or service since these are warning signs that suggest fraud.

Charitable Donation Scam

Scammers will resort to whatever means necessary to steal money from you, including playing on your empathy and compassion.

Charity fraud can take various forms, whether committed by individuals or even legitimate organizations. Making a hasty donation does not help in any way, as it only benefits the criminal responsible for the fraudulent activity.

Phishing is a type of online fraud where scammers pose as trusted institutions via email or fake websites. Fraudsters are also likely to employ social engineering by getting personal during meetings or over the phone.

It’s important to protect yourself from being taken advantage of when making charitable donations. To do so, be sure to conduct a thorough background check on the organization and verify its legitimacy by searching for its Employer Identification Number (EIN) online before giving any money.

Lottery Scam

In 2020, lottery scams were reportedly the fourth most prevalent fraud in the United States. 

These frauds frequently contact you by email, saying you’ve won a lottery in a foreign nation with a large payout. All it requires from you is a “small” sum of money to claim your reward. Scammers claim these expenditures are for insurance, taxes, bank fees, and courier costs.

You may also be asked to provide personal information for verification, but be aware that this can be a scam for identity theft and loss of funds.

Scammers can even compromise a person’s social media account to spread the false news that they have won a lottery or a reward to their friends and family. The fraudster then gives the target an email address where they can expect to receive instructions on how to cash in on the prize. 

Conclusion

With advances in technology, scams have become more prevalent. In addition, it has become increasingly difficult to identify them. Fortunately, most frauds can be avoided by just being careful and alert. 

You should be wary of the intentions of anyone who pressures you into making a hasty financial choice. Listen to your intuition if something appears too good to be true. Always remember that preventing identity theft and other financial frauds is preferable to fixing the damage afterward.