As small businesses brace for the impact of COVID-19, they are increasingly becoming targets of scammers looking to take advantage of the situation. From fraudulent unemployment benefits to middleman intercepts of SBA loans, small businesses are being hit from all sides by scammers looking to profit from the pandemic. In this post, we’ll look at the primary means by which scammers are targeting small businesses and what you can do to protect yourself and your business.
Why Am I A Target?
Small businesses are attractive targets for scammers for a number of reasons. First, small businesses often don’t have the same level of resources or knowledge as larger businesses when it comes to spotting and protecting against scams. This lack of awareness can make small businesses easy prey for sophisticated scammers. Second, small businesses are often in dire need of financial assistance during times of crisis, making them more likely to fall for scams that promise quick and easy access to relief funds. Finally, small businesses are often run by owner-operators who wear many hats and may not have the time or bandwidth to thoroughly vet every request for assistance that comes their way.
What Are The Most Common Scams?
False Unemployment Claims
There are a number of different types of scams that small businesses need to be on the lookout for. One of the most common is fraudulent unemployment benefits claims. In this type of scam, scammers will use stolen identities to file for unemployment benefits in the name of small business owners and employees. The scammers then collect the benefits, leaving the small business owner on the hook for any overpayments.
The best means to protect yourself against this type of scam is to set up a credit monitoring service, such as a LifeLock. These services monitor the dark web and public records for any transmission or new accounts opened with your personally identifiable information (PII), and can assist with halting and/or recovering from losses incurred, provided you are a customer prior to the incident.
Fraudulent SBA Loan Applications
Another common scam targeting small businesses is loan interception scams. In this type of scam, scammers will pose as small business owners or employees in order to intercept SBA loans or other forms of financial assistance that have been approved for the small business. The scammers will then redirect the funds to their own accounts, leaving the small business owner high and dry. Another angle is to offer bridge loans at exorbitant rates until the SBA loans come through, which may or may not have been filed on the business’s behalf.
To protect yourself from loan interception scams, it’s important to be aware of the process for applying for and receiving SBA loans. Be sure that you are the only one with access to your small business’s bank account information, and never give out your account information to a 3rd party. If you’re unsure about a request for assistance, contact the SBA directly to confirm that it is legitimate before taking any action. If you require the assistance of a facilitator in the process, request a referral from the SBA directly, or even your bank, and avoid responding to letters, emails, or cold calls into your business promising you a quick response.
Charitable Donation Scams
In the wake of COVID-19, small businesses are also being targeted by scammers seeking to take advantage of their generosity. Charitable donation scams come in a few different forms, but they all involve scammers posing as legitimate charities in order to solicit donations from small businesses. The scammers may promise that the donations will go to help small businesses affected by the pandemic, or they may say that the donations will be used to fund COVID-19 research, or even assist with benefits or relief for overworked first responders. In some instances, it’s completely fraudulent, in others a very small percentage goes to the cause, and the lion’s share is divided among hired solicitation firms and charity managers.
The best way to protect yourself from charitable donation scams is to do your research before making any donations. Be sure to verify that the charity you’re considering donating to is legitimate, and avoid giving cash donations if possible. Check review sites such as Charity Navigator or inquire with your accountant or other tax professionals for opportunities to be charitable and also receive a tax receipt.
As businesses have increased their dependence on digital connectivity, new opportunities arise for cybercriminal activity, which is why we at ENGS take cybersecurity so seriously. We hope you find these tips helpful in being on your guard against common pandemic fraud attempts. If you are unsure if your business is adequately protected against losses against numerous risks, contact one of our business insurance company representatives with ENGS Insurance Agency today.