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Protect Your Small Business from Scams

Protect Your Small Business from Scams
February 28, 2012

While large firms may have sophisticated technology and staff dedicated to thwarting crime, many small businesses don’t -- and therefore can make easy targets for scammers.  The Federal Deposit Insurance Corp. (FDIC) offers the following suggestions for protecting your small business.

Be on guard against inside jobs. This includes employee theft or misuse of cash, merchandise or equipment as well as fraud. Minimize risks through steps such as pre-employment background checks, automated inventory tracking systems, audits and clearly outlined policies for personal use of computers and other business equipment. Carefully select who handles revenue from customers, pays the bills and reviews account statements. Have procedures in place to detect and deter fraud.

Watch out for fraudulent transactions and bills. Scams can range from consumer payments with a worthless check or a fake credit or debit card to fraudulent returns of merchandise. Be sure you have insurance to protect against risks. Also, ignore offers to buy lists of federal grant programs. To learn more about protecting your business, consult your local Small Business Administration District Office (  

Be aware of unauthorized electronic transfers. The FDIC has seen an increase in reports of unauthorized electronic transfers made from bank accounts held by small businesses, which can be very costly. Monitor account balances regularly, perhaps daily, to look for suspicious or unauthorized activity.

Protect your computers and email. The most common and dangerous scam for small businesses is account takeover. By sending fake emails and using fake websites to deliver malicious software, fraudsters may be able to obtain the IDs and passwords for online bank accounts and then make withdrawals from accounts. Equip your computers with up-to-date anti-virus software and firewalls. Don’t click on links in or attachments to an unsolicited email that asks for confidential information, even if it appears to be from a company you do business with or the government. Legitimate organizations won’t request that kind of information in an email. When in doubt, go to another source to find the organization’s contact information so you can independently confirm the validity of the request.

Learn more. To check out a variety of frauds targeting small businesses and what you can do to stop them, visit the scam alert page at

These tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. The IBA serves it members by providing legislative advocacy, training, regulatory compliance and other services designed to enhance the ability of banks to serve their communities. Learn more at