Own A Small Business? Beware Of These Money And Currency Scams!

Pile of one dollar bills with messages on them.

Up to 60 percent of small business owners worry about cyber security, according to MetLife and the U.S. Chamber of Commerce Business Index. But alarmingly, businesses with fewer than 20 employees are less worried about securing their businesses. No matter how many staff you have or how small your business is, it’s important to protect it against fraud. The reality is that small businesses are regularly the targets of money and currency scams, often because startups don’t have the same level of security as businesses that have been around for a long time. Since being the target of fraud can cost your small business between $82,000 and $256,000, according to TechRepublic, it’s vital to secure your money in the same way you would secure your smartphone or other devices. Here is an outline of some of the most common money and currency scams going around at the moment, and how to guard against them.

Money Transfer Scams

PayPal is one of the largest money transfer companies. There are more than 227 million PayPal accounts worldwide. While it is generally safe to use, there are scams that do the rounds which can be harmful for small internet business owners.

An example of a current scam is what’s known as an “overpayment scam.” How it works is that a customer sends you a PayPal payment that’s actually greater than the purchase price of your order. They then ask you to transfer them the money difference, perhaps by saying they overpaid you and made a mistake. You might go ahead and send them the money without realizing that they could’ve paid for the purchase with a stolen bank account number or credit card. In addition, if the real account holder later reports fraudulent activity on their account, the money—including the extra money you’ve sent to the criminal—will be taken from your account.

Another popular money-transfer service is Western Union, and it’s also manipulated by fraudsters at times. One of the current scams making use of Western Union is the creation of fake charities. As a small internet business owner, you’re likely to want to get involved in helping charities. Research conducted by Cone Communications found that 85 percent of consumers have a positive image of a company when it supports their most important causes or charities. However, be careful not to fall for a charity scam. It’s alarming how easily fraudsters can make you believe that a money transfer service like Western Union is backing their “charitable” efforts. How this scam works is that the fraudster might contact you by email or phone, requesting a donation to be sent via Western Union to assist victims in need of help. For instance, if there was a recent natural disaster in the country that has displaced many people, they might use the tragedy for the purposes of their scam. It can be tempting to jump on board and help those in need, but be warned—your money is likely to go to fraudsters! Real charities will never contact you out of the blue and ask for donations through a money transfer service. 

Internet Banking Scams

Approximately 69 million Americans use online banking. This is quite a small number, and some reasons for that is because many people aren’t sure how to use online banking while others don’t trust it. For those who do use online banking and have multiple streams of income entering their online accounts, it’s essential to manage currency risks for small businesses. A banking scam that recently made the news involves someone calling you and claiming to be from your bank. They might ask if you’ve forgotten your password. You’ll likely say no and then forget about the call. However, the criminal will call your bank requesting for your password to be changed. He/she will pretend to be you and transfer thousands of dollars out of your account. It might seem unreal – how can a fraudster override your passwords and get the bank to greenlight the money transfer? According to a white paper from Guardian Analytics, there are limitless ways in which criminals can gain access to your bank accounts, whether online or offline. This often includes shady methods of manipulating the bank’s employees and/or systems. Criminals might also try to find ways in which to impersonate you or your voice so that they can authorize the money transfer.

Making use of two-factor authentication is important to prevent these banking scams, as is monitoring your account on a regular basis to spot any strange changes in it. That’s why internet banking is so beneficial. It gives you the chance to check up on your accounts any time of the day or night, at the click of a button. Another way to protect your account is to ask your bank if you can set up some notifications to alert you to any banking transactions or changes to your password. These can be sent to you via text or email.

Bounced Check Scams

If your business involves the selling of products, the promise of a new customer can be exciting. However, be careful because you could fall for a scammer. Criminals pretend to be customers by asking you about your products, such as on social media. Then, they place a large, expensive order. Although you’re probably thrilled at this stage, things are about to go south. The “customer” will pay for the order. You, or one of your employees, might confirm that the payment’s been made into your account by studying the electronic transfer amount and/or seeing proof of payment. You’ll see that the payment is reflected and not worry about it. So what’s the catch? The fraudster has made a check deposit and not an electronic funds transfer, and the check has bounced, but you won’t realize this yet. The criminal will then contact you and say that he/she needs their delivery urgently. This is so that by the time they receive the goods, they’ll vanish—and you’ll be left without any money. This scam works so well because it takes a few days for a check to clear, so by that time the criminal is long gone with your products.

It’s important to realize that federal law states that banks have to make any funds that are deposited into accounts available very quickly, within the timespan of five days. If you can withdraw the money from your account that the “customer” has deposited, this doesn’t mean you haven’t been the victim of a scam. It can take up to weeks for the fraud to be discovered and for the check to bounce!

So, how do you prevent this scam from happening to you? It can help to tell buyers you’d prefer payment from an escrow service or PayPal. It’s also important to be careful of any overpayment from the buyer. This is when a buyer sends you a check but the amount is greater than the cost of the item they’re purchasing. Although you might quickly send back the check and item, rather request that the buyer writes a check for the specific, correct amount. Fraudsters in this scenario would possibly refuse to do so, which should get your alarm bells ringing. You should also avoid any potential buyers who don’t want to use checks from reputable and well-known banks that you have nearby. The closer the bank is to you, the easier it is for you to go to the branch and check that their check is genuine. It takes some effort, but it’s worth it to keep your money and business products safe.

Cryptocurrency Scams

Every day, approximately $9 million are lost due to cryptocurrency scams. One of the most disturbing scams is when fraudsters try to sell you cryptocurrency that doesn’t exist. This recently happened in the UK where the City of London Police closed down a cryptocurrency business that was trying to “sell” fake digital currency. If you receive a call out of the blue from someone claiming to be selling you cryptocurrency, it should be a red flag. It’s important to remember that someone who’s a legitimate investor won’t cold-call people to try to sell them any financial opportunity. The best thing to do to stop fraudsters is to take note of their name, company name, address and contact number, so that you can report them to your local police.

Another cryptocurrency scam involves the violation of passwords. This is commonly seen in Bitcoin. It’s easier than you think for a criminal to gain access to your account password. Although a cryptocurrency service aims to help you remember your password by keeping things simple—you just have a username and basic password, much like other accounts you access on the internet—this can be disastrous because basic login is easy for criminals to bypass. To protect your bitcoin wallet, it’s vital to strengthen your account with two-factor authentication. And don’t forget to do the same thing with your bitcoin storage services. Avoid using texts as part of a secure login process. They’re really easy for criminals to manipulate because scammers can block your text messages. Rather use a verification app, such as Google Authenticator, to keep your digital currency safe.

Forex Scams

If you regularly use Forex, be aware of one of their common scams: signal selling. It’s worth your while to do so as a small internet business owner because the truth is that investors rarely recover funds from big cases of fraud. So, how does a signal selling crime work? First, it helps to know that a signal seller offers a system that attempts to spot the best times for buying or selling a currency pair. This system can be automated, relying on breaking news or other analyses. Signal sellers require regular payment for this service to you. However, they’re often scams. Can anyone really predict what will happen in the trading market? This is often up for debate. If you’re going to use a signal seller to help you, be sure that you open a trading account with a well-renowned seller to protect yourself and your money.

Phishing Scams

Phishing scams are popular but some specifically target small business owners. One of these involves the shipment of purchases to you. As an internet business owner, you might like to do shopping online for your business, but don’t fall for fake shipping information scams. How these occur is that phishing emails are sent to your business, saying that a parcel is on its way to you. The email might include information that looks legitimate, especially if you are expecting a package or someone else in your company has bought something. There’s usually a package tracking link included in the email. But when you click on the link, it contains dangerous malware that infects your computer or steals your personal information. This could also include an attempt to steal your digital currency.

Another scam that involves phishing is known as “fake bitcoin gift notifications.” In essence, it works the same as the above shipping information scam. You’ll receive an email saying that you’ve received or won bitcoins but in order to gain them, you have to log into your wallet. A link will be provided in the email so that you can easily access your wallet. Of course, when you click on that link and punch in your log in details, you won’t be directed to your wallet but elsewhere – and handing over your personal information and bitcoin to the fraudster in the process! If you do have a package on the way to you, consult with the courier company directly to track your purchase, instead of clicking on email or text links. As for Bitcoin “gifts”, if you’re not expecting anything, be highly suspicious of any links to so-called rewards that only benefit the fraudster sending them to you.

When you’re starting out as a small business, you need to be careful about your money. There are many scams that target various types of transactions, from money transfers and cryptocurrencies, to Forex scams and checks. As the owner of a small internet business, it’s vital that you stay on top of popular scams to prevent becoming a target – and risking the financial wellbeing of your startup company.