A guide to bank fraud protection for small business owners

I was sad to see a piece from a small business owner who had been a victim of fraud published in The Guardian today, resulting in their Revolut business account being emptied and losing all the money they had.

What stood out to me was that the advice published in The Guardian was for business owners to move their money away from Revolut. Today, I also learned about the volunteer CRM code many UK banks adopt to help their customers who have been victims of fraud.

Having read this piece, I wanted to put together this guide to different types of financial fraud that a business owner could encounter and what they could put in place to help protect you from becoming a victim of fraud like the business owner in the article above.

These schemes pose a risk to financial assets and can undermine business credibility. Recognising and understanding these threats is paramount in crafting a robust defence strategy. This guide will walk you through prevalent forms of bank fraud and provide detailed, actionable advice on fortifying your business against these deceptive tactics.

Expanded overview of bank fraud types​

HMRC impersonation scams​

Beyond basic tax debt or refund scams, fraudsters might also threaten legal action over unpaid taxes or offer unsolicited tax advice for a fee. They leverage the authority of HMRC to intimidate victims into compliance.

Phone number and email spoofing​

Scammers masquerade as representatives from banks, using sophisticated technology to spoof caller ID or email addresses, making it appear that communications are coming directly from trusted institutions.

CEO fraud​

In these scenarios, scammers pose as company executives or senior managers, emailing or messaging employees requesting urgent bank transfers or sensitive financial information.

Invoice fraud​

Fraudsters intercept or falsify invoices from legitimate vendors. They then redirect payments by convincing businesses that they've changed their banking details.

Tech support scams​

Businesses may receive calls or emails from individuals claiming to be tech support from well-known companies, alleging that the business's systems are at risk. They aim to gain remote access to systems or solicit payments for unnecessary services.

Ransomware attacks​

Malware that encrypts or locks valuable digital files and demands a ransom to release them. Often, payment does not guarantee recovery of the files.

Strategies to combat bank fraud​

Strengthen verification processes​

Always verify any unsolicited financial requests or changes in payment details directly with the entity making the request, using previously known contact information. Implement dual authorisation for financial transactions, especially those exceeding a certain threshold.

Educate and train your team​

Conduct training sessions on recognising and responding to phishing attempts, invoice fraud, and other scams. Encourage a culture of scepticism and verification for unsolicited communications.

Implement advanced security measures​

Utilise firewalls, anti-virus software, and email filtering services to protect against malware and phishing attempts. Regularly update your software to patch any security vulnerabilities.

Adopt secure payment practices​

Use payment methods that offer traceability and verification, such as bank transfers and checks, rather than cash. Regularly audit your financial transactions and verify the authenticity of invoices by contacting suppliers directly.

Prepare for ransomware​

Regularly back up important data in a secure, off-site location. This mitigates the damage caused by ransomware attacks and reduces the temptation to pay ransoms.

Choose a protective bank​

Ensure your banking institution subscribes to the CRM Code for better protection against scams and potential reimbursement. Look for banks with robust fraud detection systems and those that offer insurance or protection services against fraud.

Regular monitoring and reporting​

Keep a close eye on financial statements and immediately investigate any discrepancies. Report any instances of fraud to the appropriate authorities, such as Action Fraud and your bank, to help prevent further incidents.

Additional resources​

• Financial Conduct Authority (FCA): Offers comprehensive guidance on protecting your business and understanding your rights in the event of bank fraud. (FCA website)
• Action Fraud: The UK's national fraud and cybercrime reporting centre provides a platform for reporting fraud and obtaining support. (Action Fraud)
• Get Safe Online: Provides free expert advice on protecting your business against cybercrime, including fraud prevention tips. (Get Safe Online)

Protecting your business from bank fraud requires a multi-faceted approach involving vigilance, education, and robust security practices. By staying informed about the various forms of fraud and implementing these strategies, you can build a resilient defence that protects your business's financial and operational integrity. Communities such as UK Business Forums (UKBF) also provide a place for real-life experiences and advice on combating fraud.

Together, we can create a safer business environment for everyone.