COVID-19 dealt a big blow to America’s 30 million small businesses, and not just from mass shutdowns. As the federal government earmarked hundreds of billions of dollars in loans to help small firms stay afloat, fraudsters unleashed a torrent of schemes to get at that money and otherwise exploit entrepreneurs in uncertain times.
The scam often starts with a call or email, purportedly from a source a business owner would ordinarily trust, like a local bank or the U.S. Small Business Administration (SBA), offering to facilitate federal help — for example, the Paycheck Protection Program and Economic Injury Disaster Loans that were part of the government’s coronavirus stimulus package.
The fraudsters pump you for information they say will speed you the money. They might even set up fake websites to collect your “application.” It’s all a ruse to get a quick payment, gain access to your bank account, harvest private data like Social Security numbers, or seed your company’s computer network with malware or ransomware.
Such tricks are nothing new. In a 2018 Better Business Bureau (BBB) study, nearly two-thirds of small businesses reported being targeted at least once by scammers in the previous three years, and more than 1 in 8 lost money or sensitive business information. Based on the survey data, the BBB estimated that fraud robs small firms of $7 billion a year. As with the pandemic, natural disasters bring scam artists out of the woodwork to prey on businesses seeking help to rebuild.
Scammers deploy many other tricks to go after small businesses. Here are some of the more common ones, according to the BBB and the Federal Trade Commission (FTC).
Fake invoices: Crooks send phony bills for products and services a business commonly uses, such as office supplies or web hosting, hoping the person responsible for paying invoices is too busy to notice the deception.