Avoiding Business Fraud in Uncertain Times
How business owners can safeguard their companies as they respond to COVID-19
Updated June 18, 2020
When disaster strikes, so do fraudsters. As business owners respond to the COVID-19 pandemic, they should be extra vigilant to protect their companies against fraudulent activities.
What are some examples of fraudulent activities affecting small business owners?
Business owners are impacted by two types of fraud:
Traditional fraud, such as counterfeit checks, identity theft, or stolen credit or debit cards
Emerging fraud, such as business email compromise, malware or phishing
As technology evolves, criminals take advantage of the same digital tools that we use for our business and personal lives to commit fraud with greater speed and more often. This could be a scammer posing as a vendor asking to send money to a new account, a fake telephone call from the IRS, or a phony cease and desist order demanding money. No matter its form, fraud can have a devastating impact for small business owners, especially as they navigate today’s uncertain times.
How can business owners detect and prevent fraud?
Many small businesses don’t have in-house fraud resources, but they can still take steps to avoid becoming the victims of fraud:
Keep an eye out for unusual payment requests (e.g., emergency payment email from a company executive) or changes to normal payment requests (e.g., new account number for a supplier payment) and double check to make sure they are legitimate
If you receive an unsolicited email, do not click on links and exercise caution when handling attachments. Be sure to also check to ensure that it is coming from a trusted email address and be on the lookout for typos!
Do not respond to emails requesting any personal or financial information from sources you don't know and trust - especially in connection with COVID-19
Check with your partners and vendors (e.g., payment processors) to make sure they have controls in place to prevent fraud
Monitor your accounts and personal credit reports regularly and sign up for credit alerts
Any emails, links, or attachments relating to COVID-19 should be treated with caution, as should any social media outreach, phone calls, or text messages about the pandemic.
What else should business owners keep in mind?
Business owners should think about how they manage the risk of their employees committing fraud or falling victim to scams. Business owners may consider additional best practices such as:
Separation of employee duties and dual approval to execute large transactions
Periodic independent audits of finances and key business processes
Employee training to familiarize them with fraud risks and how to spot scams
Reminding employees of general best practices, like using strong passwords and changing them regularly
To sum things up, avoiding scams takes vigilance and a bit of caution - especially during challenging times. If you have any scam concerns regarding a Capital One account, please call us at the number on the back of your Capital One credit or debit card so we can help you resolve them.
Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.
We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.