As a small business owner, you should always be on your guard against fraud. With the upcoming July 15 tax deadline and the general vulnerability to the COVID-19 pandemic, you want to be even more careful now. Fraud can be more common in times of uncertainty, so it is important to remain vigilant. We answered a few questions about small business fraud, including ways to protect yourself and report suspected criminal activity.
Questions about coronavirus fraud?
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What types of coronavirus scams should I be aware of?
The types of crimes are nothing new; Criminals are simply using the pandemic as an opportunity to take advantage of people. Here are some common COVID-19 scams that you, as a business owner, should watch out for:
Fraudsters can call or send SMS or email messages that are said to come from tax authorities such as the Internal Revenue Service (IRS) or even from public health organizations such as the Centers for Disease Control (CDC) or the World Health Organization (WHO). Keep in mind that these organizations will most likely not have your email address. Even if it does, there's no reason for them to ask for your social security number or other confidential financial information. If the IRS wants to correspond with you, this is usually done by post and not by phone. If you have any doubts and want to make sure your tax is OK, contact the IRS yourself.
Fake charities or financial relief
While there are legitimate government aid programs designed to help small businesses survive the pandemic, fraudsters can promise donations, loans, or government funds for an upfront fee or personal information. In general, you should not provide sensitive information to unwanted callers. If you want to seek help or donate and want to check the validity of an organization, thorough online research can be effective.
Business email fraud
Employees may receive emails that appear to be from a manager but are actually fraudulent. The sender can request a transfer of money or the disclosure of sensitive information. In other cases, the email may appear to come from your IT department, ask for a password, or ask the reader to download software. In either case, you should quickly warn employees of this type of security breach to ensure that no one on your team falls victim. In general, it is a good idea to train all employees in safe internet surfing and email usage, especially if your employees are working remotely.
Fraud with PSA or test kits
In this type of fraud, a fraudulent actor tries to sell personal protective equipment (PPE) such as face masks or COVID-19 test accessories that are either fake or actually do not exist. As a best practice for secure online shopping, you typically want to make sure you have a secure web connection with the URL starting with "https" and the website using valid trust seals. Be careful with products that claim to prevent, treat, diagnose, or cure COVID-19. In general, it is advisable to only give your bank and credit card information to trusted providers. If an offer seems too good to be true, chances are it is true.
What should I do if I suspect fraudulent activity?
If you receive an unsolicited email or text message that appears fraudulent, do not click links and do not open attachments. These can expose your network to malware. If you've already unwittingly shared confidential information, it may be a good idea to freeze your balance so that no new accounts can be opened. Of course, you may also need to contact your bank and creditors to alert them of possible fraud.
Make sure that all of your staff understands and recognizes the telltale signs of potentially fraudulent activity, aside from remaining vigilant yourself. Please revisit and update your employee handbook to ensure that it contains the latest information on data security and the log for violations.
If you receive an email, text message, or call you suspect is fraudulent (or discover a suspicious website), you can report it directly to the Department of Homeland Security at email@example.com.
Get help when you need it
This is already a challenging time for small businesses. So be vigilant to avoid further financial disruption. Make sure you understand your options for state relief and get legal assistance when needed. If you have any legal questions or concerns about COVID-19, contact a lawyer at the Coronavirus Legal Center for Business free of charge.