Small businesses are prone to fraudulent attacks and security breaches from criminals and even internal employees because of the notion that small businesses may not have fraud defense mechanisms in place. Every day, fraudulent attacks or attempts are made on small businesses. If you own a small business, you might have experienced one today. Fortunately, this article will help you stay informed about how to identify, prevent, and respond to scams.

In this article, you'll learn about common scams targeting small businesses, what to do if you experience an attack, and how to safeguard your business from fraud.


 

Small Business Scams? What Are They? 

 

What is a small business scam? Small business scams are malicious schemes designed to trick business owners, employees, or customers into giving away their money, sensitive information, or access to business systems. 


 

10 Common Scams Targeting Small Businesses

 

1. Phishing Scams 

 

Phishing or email scams happen when a hacker sends an email to a business or an employee, pretending to be from a legitimate source, in order to deceive them into revealing or sending back sensitive information, such as passwords, banking information, etc.

These emails typically have malicious links or fake invoices attached, and the scammers may use social engineering techniques to get small business owners to willfully or urgently share sensitive information. 

 

How To Identify Phishing Scams  

 

  • - The email contains urgent or threatening language, pressuring you to act immediately.
  • - The email address from which the email is sent,  is different or even slightly from the real company’s domain.
  • - The links in the email lead to unfamiliar or misspelled website URLs.
  • - Unreasonable deadlines are made for the requested payment


 

How To Prevent Phishing Scams

 

  • Train employees to recognize phishing attempts regularly.
  • Use email filters and security software to block suspicious messages or spam. 
  • Do not click links or download attachments that are sent unknown sources.


 

2. Tech Support Scams 

 

Scammers may pretend to be IT service providers, they call or send an email, claiming, that your business has a security issue or software vulnerability. When you believe them, they trick you into giving them remote access to your systems or paying for unnecessary services.

 

How To Identify Tech Support Scams 

 

  • Unsolicited calls, emails, or pop-ups claiming your system has a virus, even when you haven’t noticed any issue at all with your system.
  • When the caller requests remote access to your system or computer.
  • The caller or sender asks for immediate payment to access software or a repair service.

 

How To Prevent Tech Support Scams 

 

  • Do not grant remote access to unsolicited callers.
  • Make sure to verify any  tech support claims by contacting your official service provider.
  • Keep your business software updated to avoid any vulnerabilities on your part. 

 

3. Fake Invoice Scams 

 

This type of scam is closely related to phishing scams; scammers send invoices pretending to be from legitimate sources to trick businesses into sending money to the provided account details. 

 

How To Identify Fake Invoice Scams 

 

  • - The invoice references an order or service you do not recognize.
  • -  Unreasonable deadlines for payment
  • - Look for any slight variation in the email to the legitimate one. The variations may often go unnoticed. It is important to be keen on details.  

 

How To Prevent Fake Invoice Scams

 

  • - Make sure to verify all payment requests by contacting the sender directly.
  • - Orientate employees to recognize phishing attempts regularly.
  • - Employ the use of email filters and security software to block suspicious messages or spam. 


 

4. CEO Fraud or Business Email Compromise (BEC)

 

 Scammers may hack or impersonate high-level executives or business partners through email to deceive employees into making unauthorized payment, they also request sensitive data, wire transfers, etc.

 

How to Identify CEO Fraud or Business Email Compromise (BEC)

 

  • - The emails requesting wire transfers, payments, or sensitive data come from high-level executives but have subtle email address changes.
  • - The requests are urgent and demand immediate action.
  • - The sender discourages verification or alternative contact.
  • - Look for differences in tone or writing style if you frequently exchange correspondence with the executive. 

 

How to Prevent CEO Fraud or Business Email Compromise (BEC)

 

  • - Implement multi-factor authentication (MFA) for email accounts.
  • - Establish a verification process for financial transactions.
  • - Educate employees about recognizing fraudulent requests.

 

5. Directory Listings Scams 

 

Scammers often contact small businesses, claiming that they offer directory listing services that can or will improve their online visibility. They often charge very high fees for ineffective or non-existent services. They may even falsely claim that your business is already enrolled and demand payment for continued service.

 

How To Identify Directory Listings Scams 

 

  • - Receiving unwanted or unsolicted calls or emails offering guaranteed top rankings in business directories.
  • The service being proposed or offered lacks transparency and provides scant details about where your business will be listed.
  • - The supposed business representative requests for an immediate payment and uses high-pressure tactics.
  • - The company name is unfamiliar, and a quick search yields negative reviews or scam warnings.
  • - The business’s website looks hastily put together. 

 

How To Prevent Directory Listings Scams 

 

Research any directory service before making payments. Legitimate directories like Google Business Profile and Yelp do not charge fees for basic listings.

 

  • - Ensure to verify claims by checking your current directory listings directly.
  • -  Avoid sharing sensitive business information with unverified third parties.
  • - Train employees frequently to recognize high-pressure sales tactics and scams.

 

6. Social Media Impersonation Scams

 

Social media impersonation scam is a popular scam on the rise, perhaps due to the rise of the use of  social media. Scammers create fake social media profiles pretending to be legitimate businesses. They can use stolen logos, images, and similar usernames to deceive customers into sharing personal information, making payments to unauthorized accounts, or clicking malicious links.

 

How To Identify Social Media Impersonation Scams  

 

  • - Duplicate or slightly altered versions of your business’s social media pages appear online.
  • - Customers report suspicious messages, fake promotions, or unusual requests from "your business."
  • - Fake or spam accounts send direct messages asking for payments or personal details.
  • - Links shared by the impersonator leads to unsecured or unrelated websites.

 

How To Prevent  Social Media Impersonation Scams  

 

  • - Search frequently for fake profiles  impersonating your business and report them properly and  promptly. 
  • - Enable verified checkmarks on platforms like Facebook, Instagram, and X (formerly Twitter) to distinguish your official account.
  • - Warn customers only to trust your official website and social media pages for transactions.
  • - Educate employees and customers on how to spot impersonation scams.
  • - Set a recognised pattern for correspondence and transactions with customers and warn customers of other differeing patterns.

 

7. Online Advertising Scams 

 

Some Scammers target small businesses by offering paid online advertising services that promise increased web traffic, higher search engine rankings, or increased social media engagement. However, these services often fail to deliver any meaningful results. The scammers use fraudulent methods like bot traffic, or simply take the money and go AWOL.

 

How To Identify Online Advertising Scams

 

  • - Promises of "instant" top rankings on Google or guaranteed website traffic.
  • - Unsolicited emails or calls from unknown marketing agencies.
  • - Requests for upfront payments without a clear contract or service breakdown.
  • - Sudden spikes in website traffic with little to no actual customer engagement.
  • - Bot-like language patterns.

 

How To Prevent Online Advertising Scams 

 

  • - Research any digital marketing agency before signing contracts or making payments.
  • - Only work with reputable advertising platforms like Google Ads and Meta Ads.
  • - Avoid agencies that use vague language or lack a verifiable track record.
  • - Make sure to set measurable KPIs and track campaign performance using analytics tools

 

8. Domain Name Scams

 

Scammers monitor domain registration records and contact small businesses, claiming their domain is about to expire or that a competitor is trying to register a similar name. They then pressure businesses into overpaying for unnecessary services, fake renewals, or offer another domain extension at an inflated price. 

 

How to Identify Domain Name Scams 

 

  • - When you receive unsolicited emails or letters warning that your domain is about to expire, urge immediate payment.
  • - Messages in your main inbox claiming another company wants to register a similar domain name, pressuring you to buy additional extensions (e.g., .net, .org)
  • -  Emails from unofficial domain registrars with vague company names or addresses.
  • - They request urgent wire transfers or credit card payments without verification options.

 

How to Prevent Domain Name Scams

 

  • - Verify your domain status yourself by checking your official domain registrar account (e.g., GoDaddy, Namecheap, Google Domains).
  • - Only renew domains through your official provider, not through unsolicited emails.
  • - Be cautious of high-pressure tactics urging you to purchase unnecessary domains ,and do not give in to them.
  • - Enable domain auto-renewal to prevent lapses and avoid scam attempts.
  • - Check WHOIS data privacy settings to reduce exposure to domain-related scams.
  • - Train staff on how to identify domain name scams and how to shut them down frequently.

 

9. Employment Scams

 

Scammers pretend to be employers or recruiters, posting fake job listings on online platforms to trick job seekers, including small business owners looking for opportunities. These scams often involve requests for personal information, upfront payments for background checks, training, or equipment  for the scammer to disappear once payment is made.

 

How to Identify Employment Scams 

 

  • - The job offer seems too good to be true, with high pay and minimal requirements.
  • - The "employer" asks for upfront fees for training, background checks, or materials.
  • - The email or job posting contains vague details and no official company website.
  • - Communication happens only via chat apps or personal email (not company domains)
  • - They request sensitive personal information (Social Security Number, bank details) too early in the process.

 

How to Prevent Employment Scams

 

  • - Research the company before applying. Make sure to check their website, reviews, and LinkedIn presence.
  • - Never pay upfront for job applications, training, or background checks.
  • - Verify recruiters by reaching out to the company directly.
  • - Be cautious of remote jobs that require immediate financial investment.
  • - Use official job platforms like LinkedIn, Indeed, or government job boards.

 

10.  Business Loan or Grant Scams

 

Scammers target small businesses by offering "guaranteed" loans or grants with quick approval and minimal requirements. They often request upfront fees for sensitive personal or financial information and then disappear, leaving the business with no funding and at risk of identity theft.

 

How to Identify Business Loan or Grant Scams 

 

  • - Unsolicited loan or grant offers that promise instant approval without verifying business financials.
  • - Requests for upfront processing fees, application fees, or payments via wire transfer or gift cards.
  • - No verifiable business address or official website for the lender.
  • - High-pressure tactics, urging you to act immediately before the "offer expires."
  • - Government grant scams using fake names or impersonating real agencies like the SBA.

 

How to Prevent Business Loan or Grant Scams 

  •  
  • - Verify lenders or grant providers through official government websites (e.g., SBA.gov or Grants.gov).
  • - Never pay upfront fees for loans or grants; legitimate lenders deduct costs from loan proceeds.
  • - Check reviews and credentials of lenders before applying.
  • - Avoid sharing sensitive information (e.g., SSN, EIN, or bank details) with unverified sources.
  • - If an offer sounds too good to be true, it probably isn't true. 


 

What to Do When You Experience a Small Business Scam

 

If your small business falls victim to a scam or an attempted fraud, taking swift action can help reduce damage, recover losses, and even prevent future attacks. 

You can follow these steps to respond effectively:

 

Step 1: Stop Communicating  with the Scammer

 

Step 2: Secure Your Accounts and Systems

Change your passwords, enforce new MFA authentication, scan systems for malware, notify your bank to block unauthorized transactions or to possibly just block your account or credit temporarily


 

Step 3. Report the Scam

File a report with your local authorities or the FBI’s Internet Crime Complaint Center (IC3) (ic3.gov). Or you can report to relevant government agencies such as:

 

  • - Federal Trade Commission (FTC): ReportFraud.ftc.gov
  • - Better Business Bureau (BBB): BBB Scam Tracker
  • - Securities and Exchange Commission (SEC) (for investment fraud): SEC.gov
  • - Your state’s attorney general who is responsible for local fraud cases.

 

Report to your web host or domain registrar if the scam involves website impersonation or to the concerned social media platforms that scammers impersonate your business online.

 

4. Warn Employees and Customers

 

  • - Inform your staff about the scam to prevent future incidents.
  • - If customer data was compromised, notify affected individuals and advise them on security measures.
  • - Post a warning on your website or social media if scammers are impersonating your business.

 

5. Review and Strengthen Security Measures

 

  • - Enable two-factor authentication (2FA) on all important accounts.
  • - Train employees to recognize and report suspicious emails, calls, and messages.
  • - Regularly back up data to avoid losing information in a ransomware attack.
  • - Use official services for domains, advertising, and financial transactions to prevent falling for scams.
  • - Adopt and implement compliance and fraud prevention software tools from Youverify, such as Know Your Business, Know Your Employee, Know Your Customer, etc.  

 

6. Learn from Your Experience

 

  • - Assess and analyze how the scam happened and implement stronger security policies.
  • - Make sure to stay updated on common scams targeting small businesses.
  • - Network with other business owners so that you can share information and warnings with each other, especially businesses in your industry. 


 

Key Takeaways 

 

  • - Always be keen on details and verify organizations before initiating transactions with them.
  • - Regularly train staff on detecting and identifying scams that are target  small businesses.
  • - Stay updated on common scams affecting small businesses.
  • - Learn from your experiences. 
  • - Ensure to report fraud suspicions and attempt to relevant platforms and authorities.
  • - Be like 200+ smart small business owners in 15 + countries around the globe who safeguard their businesses from small business scams with Youverify. Book a free demo and consultation today.