Holiday Scams Targeting Small Businesses
The holiday season is a busy time for retailers and consumers, with many shoppers scrambling to buy everything they need and stores working hard to make sure they’re staffed and stocked. This extra activity also creates more opportunities for scammers to target small businesses.
Knowing how to spot fake retail websites and other holiday scams can help you protect your business during the holiday season. Check out this guide to make sure you’re protected for the holidays.
Why are small businesses more vulnerable to scams during the holidays?
Holiday scams are common because the holiday season is such a busy time for small businesses. Increased sales volume, seasonal employees and a busy work environment can make these scams more effective.
When you’re receiving more orders and payments, it can be easy to let suspicious activity slip through the cracks. You may also receive more invoices, shipping notices and customer communication than usual.
The holiday season can also make employees a target for scammers. Seasonal employees may not be familiar with normal processes and permanent employees may be too overwhelmed to catch suspicious activity.
Scammers use tactics like urgency and seasonal themes to make their scams appear legitimate during the holidays.
Common holiday scams targeting small businesses
There are lots of common holiday scams you should watch out for as a small business owner, from phishing emails to fraudulent orders.
1. Business email compromise
When a business email account is compromised or spoofed, scammers can use it to request urgent payments, wire transfers, gift cards, or changes to payment information. If scammers have access to business email accounts, these requests appear legitimate.
Scammers can also “spoof” emails to make it seem that an email came from a legitimate address even if it didn’t.
2. Fake invoice and vendor scams
There are a number of fake invoice and vendor scams targeting small businesses. You may receive fraudulent invoices that appear to come from legitimate vendors, or invoices for products or services you never purchased.
Scammers may also claim that banking or payment details have recently changed to coerce small businesses into sending money to the wrong account.
3. Gift card scams
You’ve probably heard about gift card scams targeting consumers, but scammers also use this tactic to target small businesses. Scammers impersonate managers or executives and ask employees to purchase gift cards, and those requests are often accompanied by instructions to send card numbers and PINs after purchasing the gift cards.
Legitimate business payments should follow an established approval process to ensure the correct payments are being sent to the right accounts.
4. Phishing emails and text messages
Phishing emails and text messages are a nuisance throughout the year, but they’re especially problematic for small businesses during the holiday season. Holiday phishing emails often include:
- Package deliveries
- Order confirmations
- Account problems
- Holiday bonuses
- Payroll updates
- Vendor payments
In many cases, scammers will simply include a link to what looks like a legitimate website asking for your username and password or payment details. Once you try to log in, your information is sent directly to the scammer.
Some scammers include malicious links or attachments that are designed to install malware that steals your information.
5. Fake shipping and delivery notifications
Fake shipping and delivery notifications are some of the most common holiday scams. Scammers impersonate delivery companies or suppliers, claiming a package is delayed, a fee is due, or an address needs to be confirmed before your package can be delivered.
Employees should verify shipping issues through the carrier’s official website or business account instead of responding to these emails.
6. Fraudulent online orders
It’s always exciting when a customer places an order, but sometimes those orders are fraudulent. When purchases are made with stolen payment information, chargebacks can land your small business in hot water.
Keep an eye out for warning signs like expedited shipping requests, unusual delivery locations, or changes to an order after payment.
7. Fake customer refund scams
Making things right with the customer is important, but you have to be careful when you’re issuing refunds during the holiday season. Scammers may reach out claiming they were overcharged, received the wrong order, or are owed a refund for some other reason. They may also provide fake receipts and ask you to issue the refund to a separate card or account.
Following established refund and verification procedures helps you avoid these holiday scams. If you can’t verify an order, don’t issue a refund.
8. Charity and donation scams
During the holidays, fraudulent organizations may reach out to businesses to ask for holiday donations. Some scammers might even pretend to represent a charity or community organization you’re familiar with.
People are often more charitable during the holiday season, but it’s important to make sure your money is going to the right place. Businesses should always independently verify an organization before donating.
9. Seasonal job scams
Seasonal job scams are common during the holidays when businesses need employees and people are looking for seasonal employment for extra income. Individuals may be targeted by fake job offers, but that’s only part of the problem.
As a small business owner, you can also be targeted by seasonal job scams. Fake applicants may provide fraudulent information to get a foot in the door and steal sensitive company details.
Warning signs of a holiday business scam
Knowing what to watch for can help you avoid holiday scams targeting online shoppers and businesses. Here are some warning signs to look for:
- Unexpected requests for urgent payments
- Changes to vendor payment instructions
- Requests for gift cards, cryptocurrency, or wire transfers
- Messages asking for passwords or MFA codes
- Email addresses that are slightly different from legitimate ones
- Unexpected invoices or attachments
- Requests to bypass normal approval processes
- Pressure to act immediately or keep a request confidential
How small businesses can prevent holiday scams
Scams are inevitable during the holiday season, but you can protect your small business by preparing your team, establishing clear processes and safeguarding your systems.
Train employees before the busy season
As the holidays approach, it’s important to spend some time training your employees to prepare them for the busy season. Training is especially important for newer employees who haven’t had the opportunity to experience the holidays as part of your organization.
Pairing newer team members with more experienced team members can also help them manage the increase in sales and traffic.
Require verification for payment changes
It’s important to accommodate your customers during the holidays, but not at the expense of your business. Customers should be able to make payment changes after making a purchase, but you should require verification for all payment changes. This prevents scammers from using stolen cards and bank accounts to make purchases, which helps you avoid costly chargebacks.
Use multifactor authentication
Multifactor authentication is one of the most effective ways to protect sensitive accounts. Any employee who has a business email account should be required to use multifactor authentication to protect their account.
Multifactor authentication ensures scammers can’t access accounts because they don’t have access to the secondary verification method, even if they have the email address and password.
Establish clear payment approval procedures
When you’re working with a lot of vendors during the holidays, it can be tough to keep track of all your outgoing payments. Establishing clear payment approval procedures helps you verify who you’re sending payments to so you aren’t tricked into sending money to fraudulent vendor accounts.
Invoices should be cross-referenced with purchase orders and delivery receipts; that way you can make sure you’re only paying for goods and services you ordered.
Keep software and systems updated
Outdated software and systems are some of the biggest targets for holiday scams. Computers, phones, tablets, and POS systems receive regular updates to patch security issues, so delaying those updates can leave your systems vulnerable.
Create a schedule for updating your software and systems to make sure you’re keeping everything as up to date as possible.
Limit access to sensitive information
Some employees and managers are inevitably going to need access to sensitive information, but limiting access is important. Employees who don’t need access to sensitive data shouldn’t be able to access it, and you should use permissions and roles to make sure experienced employees and managers don’t have access to more information than they need.
Back up important business data
While many scams and attacks aim to steal your financial information or coerce fraudulent payments, some attacks can impact your data. Important data like transactions, customer details, employee data and customer interaction data can easily be lost to malware.
Backing up important business data ensures you always have access to transaction logs and other key data. You should back up important data regularly to ensure it’s always up to date.
Make fraud prevention part of your holiday planning
Being vigilant is only one part of protecting your small business from holiday scams. The most effective way to protect your business is to make sure you have the resources to thwart scams and swiftly respond to any incidents.