Technology evolution and innovation are a boon. But the same boon can prove to be the bane for a business establishment. Financial scams these days not only target vulnerable individuals but also established and experienced businesses. From hacking into databases to faking invoices to siphoning money into offshore accounts, business fraud can grow to enormous proportions before it is dealt with. And with the advent of Artificial Intelligence (AI), it’s becoming even more difficult to identify a scam.
While you can’t hide your business from such scammers, you can take precautionary measures to make it difficult for scammers to gain access to your information and funds. But to stop a scammer, you need to understand how a scammer operates.
How Scammers Trap Businesses
Scammers usually prey on unsuspecting victims in three ways:
- Urgency and Fear: Most scammers create a sense of urgency to trap you into making an error of judgment. They make everything sound urgent, giving you no time to think it through or consult a senior in the company. For instance, scammers impersonate government officials or even the CRA, claiming your business is liable to pay a hefty sum for compliance issues and that this sum must be paid immediately to avoid legal proceedings or license cancellations. Such a scenario is sure to create panic in the businesses, which is exactly what the scammer wants.
- Sympathy: Some scammers go the ‘sympathy and help’ way to fool businesses. They could pretend to be from a tech company, telling you that your cybersecurity systems have been infiltrated and that your data has been hacked. They then offer a solution to this problem, volunteering to help secure your business data before any more damage is done, and gaining access to sensitive information, including passwords, access codes, and confidential customer data.
- Potential Business Opportunity: Business owners jump at a promising business opportunity – and it is this enthusiasm that scammers take advantage of. Sometimes they tempt you with offers of a free listing or free advertising, only to send you a huge bill later. At other times, they can pretend to be agents offering lower credit card rates or cheaper equipment or office space leasing options. Having gained the business owner’s confidence, they get the owner to sign a contract, whose terms are later changed to swindle the business. Some scammers even impersonate suppliers and vendors, demanding payment for fake invoices.
All these types of scams are carefully planned and premeditated. If that is the case, how can you safeguard your business against such master scammers?
How To Protect Your Business from Scams
Just like with healthcare, prevention is better than a cure when it comes to business scams, too. Being aware and alert can save your business from significant financial and identity theft.
Never Hurry: An “urgent” request is always a red flag. Never make a rushed decision without consulting others in your business. Even the CRA gives 30 days to reply to an audit request. Please do not panic and entertain any urgent requests or threats, no matter where they come from.
Verify the Source: With AI making it difficult to distinguish real from fake, verifying the source’s authenticity is essential before taking any action. Scammers create fake websites and email IDs that are identical to those of a real business, supplier, or government agency. In fact, replying to such emails or clicking any links given in suspicious-sounding emails is also risky. It is better to contact the business or agency through trusted channels and ask whether such an email has indeed been sent. Even better, pick up the phone and talk to an official, or visit the office if need be, to verify the authenticity of the communication. And if not authentic, gather evidence of the fake communication (phone numbers, email ids, screenshots) to share with the real business and the necessary legal authorities.
A trusted accountant has the required resources to verify the identification or authenticity of such messages or sites.
Do Not Share Details: No matter how official-looking an email is or how genuine-sounding a phone call from the CRA, bank, or any financial institution may sound, do not share any details with them before verifying if they are genuine. Scammers often pretend to be people you know and trust, and ask for more information such as login credentials, Social Insurance Numbers, tax IDs, and other sensitive information.
Set Processes for Financial Actions: When it comes to making payments, having certain safeguards in place can go a long way. For instance, it is advisable to double-check any invoices due for payment. Also, ask your colleagues or employees to check the invoices for any discrepancies. For large transactions, a two-person verification and approval system helps keep scams in check, especially employee scams within the company or business. This can be done by assigning accounting and payment duties to different people, adding an extra layer of protection to your finances.
An experienced accountant can help you chalk out proper systems and processes that can keep fraud at bay without delaying other genuine vendor payments.
Use Technology Wisely: If technology enables scammers, it also gives your business the power to fight potential hacks. A trusted, up-to-date antivirus is your biggest friend when it comes to cybersecurity. Keep all sensitive and confidential information encrypted and password-protected, with limited access to only trusted employees or senior management. A reliable and reputable accounting agency has accounting software with state-of-the-art cybersecurity defences, which they can set up for you, while also taking a backup of all your data, just to be safe.
Use Secured Payment Routes: Requests for payments using cryptocurrency or gift cards, or transfers to personal accounts, could signal a scam. Always ensure you make any business payments to a legitimate business account through a trusted payment channel that can be traced in the future if needed.
Train Your Employees: Preventing scams needs united efforts. Training your employees to identify and deal with phishing emails or suspicious communication. Explanations of actions such as collecting evidence of suspicious communication and informing senior management need to be provided to staff. They can be encouraged to stay vigilant by installing a hotline that allows anonymous reporting of dubious activity within the company.
Conduct Internal Audits: Audits are a great way to detect discrepancies or potential fraud. The fear of surprise audits can prove to be a powerful deterrent to any internal or external fraud attempts. An expert accountant can identify inconsistencies or gaps in your books of accounts during reconciliations, helping you weed out any potential scams before they impact your business.
A scam can happen to anyone, anywhere, at any time. But with the proper guidance and the right tools by your side, you can at least try to prevent any major damage to your business. The skill and expertise of a reliable accounting agency can be your friend in setting up a protective barrier between your business and scammers.
Contact MW&CO in Woodstock to Help You Protect Your Business from Scams
A professional accountant can help you set up an accounting system, software, and necessary checks to allow the business to operate as usual while the system and processes protect your business. To learn more about how MW&CO can provide you with the best accounting and bookkeeping expertise, contact us online or by telephone at 519-539-6109 or toll-free at 1-877-539-6109.