Fraud affects hundreds of thousands of Australians every year at a cost of over a billion dollars, and scammers will not discriminate when it comes to selecting a victim.  The effects of fraud are with the individual or business long after the initial incident, and the costs reach well beyond monetary losses to impact credit ratings and restrict cash flow.

According to the Australian Institute of Criminology, around one in three small businesses have fallen victim to online credit card fraud, with over half recording multiple incidents over a two year period.

When we consider the importance of small businesses to the economy, accounting for around 90 per cent of the marketplace, we begin to get an idea of the impact this can have on not only the individual business owner but the wider economy as well.

While everyone is vulnerable to some form of fraud or scam, there are a number that specifically target the business community. As we discussed last week, smaller firms are more likely to be at the receiving end of false advertising and directory billing, overpayment and tax refund scams.

Part Two of the scam and fraud series discusses the other forms of fraud to which SMEs are particularly vulnerable.

This can include:

• Banking and credit card fraud; and
• Fax back scams

Banking and credit card fraud

This is of course not limited to businesses and is in fact more often targeted towards consumers. However, for the owners and operators of small enterprise personal banking and business accounts are often one and the same and an attack on personal finances will have devastating effect on operations.

Be alert for any requests for account information, otherwise known as phishing and are often disguised as legitimate emails from banks or other reputable financial institution.

However, all credible financial providers make it a policy never to request personal information from customers online or over the phone and any request of this nature will be an attempt to illegally access accounts.

Phoney fraud alerts will also be in the form of an email claiming to be from a well-know financial institution or credit provider claiming that your account has been accessed illegally and requesting confirmation of your details.

Card skimming is another of the many forms of credit card fraud, whereby card details are lifted from an ATM during use and subsequently copied. This can be prevented by covering the pin pad with your hand while entering details and double checking the card slot. If the slot is in any way loose or ill-fitting, do not use the machine and report the incident to the branch manager. 

Fax back fraud

This is defined as an unsolicited fax offering large discounts or deals, often from an unknown source and including a number of clauses in fine print. The cost of receiving the fax will usually be substantial, as a high rate service will be used i.e. a 190 number.

Always research any product or service that comes to your attention in this way and never send a return fax.

The biggest mistake people make in relation to fraud is not only succumbing to the lure of quick and easy money or success but presuming they are too smart to be taken in by a scam.

Techniques are increasingly sophisticated, and even the most obvious of scams can appear legitimate if executed in the right way. Detecting fraud is often a matter of common sense, if it seems too good to be true it probably is. Always report suspicious activity to the ACCC.