How financial scams could affect your business

Fraudsters aren’t easy to spot. You may think that as a business entrepreneur, you’re pretty sharp and savvy and not the gullible type at all. However, blithe over-confidence is just what these scammers are counting on. Small businesses and start-ups are frequently targeted for fraud and stand to lose more than big companies, and you should never underestimate the lengths the fraudsters will go to in order to fool you, or the sophisticated tactics they’ll employ. After all, if they pull this off with enough companies, their rewards could run to the billions of pounds.

Too good to be true

Always be suspicious, even if the company that’s asking you to invest or buy their services appears to be completely legitimate. They may have plush offices, a respectable-looking website and even a list of fictional references from satisfied but actually non-existent clients (or those clients could also be in on the scam), but that’s no guarantee that they won’t disappear in a puff of smoke once they’ve got your money.


Don’t assume that the hard sell is always the hallmark of the con artist. They may promise you the world, knowing that they’ll never have to deliver, but they may also try to draw you in with a realistic-sounding proposition. They might pressure you to invest quickly while the “opportunity” is hot, or they might be playing the long game, luring you in gradually. As people, they could be confident and charming or disarmingly shy. They may contact you by phone, email, letter, or in person.

Unsafe investments

There really is no way of easily spotting a fraud. Thoroughly research any proposition that comes your way, stay sceptical, and don’t sign over any funds until you’re absolutely sure that they’re safe. Before you agree, get the full details on what you’re getting into in writing, along with information on who they are and where they can be found, and make sure that it checks out. Additionally, get professional legal advice before signing anything.

Investing in currency markets can be a legitimate and effective way to raise capital for your business, but unfortunately this field is also rife with conmen. There are many different types of forex scams, but a good rule is to only invest with brokers that are fully regulated by the Financial Conduct Authority (FCA) and, as with any other investment, do your research and read the fine print.

On your doorstep

Fraud isn’t always carried out by big-time operators. Often, it’s a case of petty cheats by employees and customers. All shops have to be vigilant about shoplifting, and also “customers” attempting to return stolen goods or items they’ve used once and then want their money back on. They might damage them deliberately and then claim that they’re faulty. Make your return conditions clear, always ask for a receipt, and be vigilant.

Employees can also attempt to defraud a company by petty theft or by claiming pay for more hours than they’ve actually worked. They may also attempt to fraudulently claim compensation by saying that they were injured at work or discriminated against. Unfortunately, it can often be more costly to fight such a claim in court than to just pay out. However, if you keep scrupulous records of any accidents and maintain a zero-tolerance approach to inappropriate behaviour, then you can cover your back to some degree.

Not what it seems

Counterfeit money is another problem that all businesses face. There are many ways that this can enter into your accounts, but all employees should certainly be trained on how to check if a note is genuine, and provided with the means to do so. Perhaps even more serious a problem is identity theft, which can affect companies as well as individuals. Fraudsters may try to use your corporate identity to carry out scams elsewhere, or they may simply want to get into your accounts and steal your money.

Keep all sensitive information safe and password protected. Look out for phishing scams and computer hackers, and make sure that your cyber security is resilient and up to date. The internet is a great boon for small businesses, but it also leaves many doors open for cyber-criminals who are becoming ever-more sophisticated in the methods they use.

There may be no tell-tale way to spot a fraud, but there are measures that you can take to protect yourself. Primarily, this just comes down to being vigilant and taking due precautions. Fraud can be big or small, sophisticated or simple, but it can all cost your business significantly if you don’t take steps to prevent it from happening.