How Entrepreneurs Are Scammed (Stories and 4 Safeguard Tactics)

What did the shop owner say when a customer complained that the energy-saving bulb they bought didn't work? “It’s saving energy as intended.” Kidding aside, business owners often encounter moments like this with customers, and sometimes with fake customers.

Scammers target business owners by using impersonation and urgency. Entrepreneurs can protect their business by ensuring proper verification processes, training employees, and leveraging privacy tools.

We always hear about customers getting scammed by fake businesses. But the thing is, business owners get scammed too. In fact, some reports show that the median loss from scams for small businesses is up to $200,000 per year.

According to the Federal Trade Commission, scammers use three tactics to scam business owners:

• Tactic No. 1 — Impersonation: Scammers pretend to be someone business owners trust. This could be a third-party, a supplier, a government agency, or a customer, convincing you to share information or pay.
  
• Tactic No. 2 — Creation of Urgency: Scammers create a sense of urgency by offering business owners time-sensitive deals or by threatening legal action, breach of contracts, or fees for delays. This is why business owners should avoid rushing into sharing information or money.
  
• Tactic No. 3 — Varied Payment Methods: Scammers often ask business owners to pay in specific ways, including cryptocurrency, wire transfers, or gift cards. These help scammers maintain anonymity or avoid refunds. So, business owners should only stick to their trusted and properly vetted payment methods and procedures.

To fully understand how exactly scammers target business owners, as well as the impact of scams on businesses, let's go over 2 examples.

Our first example involves Printesa Urbana. She's a Romanian blogger and the author of parenting books. While she already has a big following online, with a Facebook page that has over 270,000 followers, any opportunity to promote her business is still an opportunity. So, when she got an invite to a podcast by a social media influencer, she grabbed the opportunity.

As reported by Bitdefender, Urbana first got an email. It was from someone claiming to be an assistant to a well-known blogger in the US. She was invited to be a guest on a podcast and was promised to be paid for it. Because Urbana was curious and found it promising, she checked out the blogger. It was Kate Hudson.

Here's what Urbana thought of: “Really? Me, right after Kate Hudson? And I don’t even create content in English. It felt like too much.”

Urbana was still in disbelief of the claim. So, she did more research. She found even more bold claims, such as that the host was related to Taylor Swift, and that they're giving thousands of dollars to podcast guests.

Then, Urbana was invited to a “short” Zoom meeting to set up the specifics. But in the meantime, she received another email from a different blogger's assistant. They got a million views, promising a good audience reach, and they offered to pay her about 2,000 euros.

Thinking that the offers are too similar, Urbana started getting suspicious. So, she searched more on Google. That's when she found out that it was a scam, and that it had been around for a year.

The scam starts with a podcast invite and promises payment from a well-known host. Then, during or after a Zoom meeting, scammers will request access to your Facebook page so they can set up the live stream. But once they have access, they can either drain your ad account or lock you out of your account and demand payment.

Fortunately, Urbana was careful. She said: “Dozens of influencers have fallen for it. And if you've spent 15 years building your page, it's heartbreaking to think it could all vanish in a second.”

Our second story involves the Ginger Café and Grill, a Southside Mediterranean restaurant.

As reported by the Caller Times, the restaurant has been receiving emails and calls from a “potential client” requesting catering services. The caller asked to reserve the entire restaurant to cater for his wife's birthday. They also wanted to hire an out-of-town photographer for the event.

Ginger Café contacted the client via email. The client then replied, saying they had a photographer in mind, providing their email address. The client claimed that the photographer didn't have a phone number.

Moments later, the photographer called the restaurant, asking for them to sign a contract and to pay for another $4,300 so that the photographer could book a flight to the event. Despite it being an odd request, the restaurant sent the payment through their business credit card, thinking that the client's payment was successful.

The client offered to pay an up-front deposit. However, the payments were made during the weekends. So, it hadn’t been posted to the Ginger Café’s account. But the next day, they were notified that the client's payment was denied.

It was already too late when the restaurant found out that the scammers used a temporary authorization process to make a fake transaction, which left Ginger Café with a $4,300 charge. So, the restaurant tried running the card again. It was approved, but denied a minute later.

The “client” called again to inquire whether or not the restaurant had paid the photographer. That's when the restaurant owners told the client that their payment was declined. The client apologized and provided a different credit card. It was also declined.

The restaurant owners noticed that the photographer sounded like the client over the phone. They also called the restaurant nonstop, pressuring them into paying and signing a contract.

Zach Jaradat, owner of Ginger Café, said, “We get those scam calls and scam emails all the time. Usually, you can tell it’s a scam. But this one… It was very professional.”When the restaurant tried running the customer’s card again, it was initially approved and then denied about a minute later, the general manager said.

The owner recommends that businesses slow down when handling transactions and avoid third parties for payments. He noted, “This is the first time this happened to us. We’re going to be very careful.”

You now know how your business can get targeted and the impact scams have on businesses. It's time you knew ways to prevent being victimized.

Proper verification is the easiest, yet most effective way to avoid scams. It will help you know whether or not it's the right payment method, business partner, or client. This includes researching online or calling contacts independently to verify requests.

Your team is the target of scammers. They can impersonate bosses to trick employees into sharing sensitive information or making transactions. So, business owners must train their team in basic cybersecurity practices and scam prevention.

Your employees should know at least the following:

We recommend checking Scam-Savvy: How to Protect Yourself and Spot a Scam. This is an online course that covers 90+ scams, the psychology of scams, scam prevention strategies, reporting steps, safe recovery options (emotional and financial), how scammers target different groups (including business owners), and more!

We have available codes:

Your business must have the right tools to combat scams. This includes email authentication tools (to block spoofing), firewalls, encryption, anti-virus software, and a password manager (e.g., Bitwarden), among other privacy tools.

Overall, scammers target business owners by using tactics like impersonation and the creation of urgency.

Business owners can protect their enterprises through proper verification, employee training, and privacy tools

You are being targeted by scammers because you have information and money, and because they can exploit your human vulnerabilities. Scammers know how to exploit our desires and emotions.

Anyone with information and money can be a target of scams—from teens to older adults. Scammers can adjust their tactics and come up with new types of scams depending on their target.