Small businesses in Australia are facing a surge in investment scams, with more than half of the money lost to such scams going towards fake investment opportunities.
In a bid to protect businesses from these deceptive schemes, the Commonwealth Bank (CBA) has issued a stern warning, urging entrepreneurs to be wary of “too good to be true” offers.CBA Executive General Manager Rebecca Warren has shared valuable insights on how to identify and avoid these fraudulent investments.
Nearly 90 per cent of all scams reported by CommBank’s business customers in FY24 came from small business, with more than half of their losses going to investment scams, according to new data released by CommBank. The data, which looks at the number and types of scams reported by CommBank small businesses in the last financial year shows investment scams, phishing, and business email compromise continue to be the most prevalent scams targeting Aussie small business. “If a business owner or leader falls victim to an investment scam, it’s not just the business that could be compromised, but also the jobs of the people who work there”.
“We can see through our data that small businesses lose around $30,000 on average to investment scams, which can have a devastating impact, both financially and emotionally. When they make an investment into what they think is a term deposit with a great interest rate, they tend to put in most of the money they have available, to maximise their returns. We know running a small business is tough, and our priority is to help protect our customers from scams. Our focus is on early detection and prevention of scams through fraud prevention and monitoring activity, industry-leading features and education,” Ms Warren said.
CommBank’s NameCheck feature prompts customers if the account details on a first-time payment don’t look right based on available payment information1. CallerCheck allows customers to verify whether a caller claiming to be from CommBank is legitimate, by triggering a security message in the CommBank app. CommBank may also use CustomerCheck to identify our customers in branch or over the phone by sending a message to the CommBank app.
CBA has invested more than $800 million to help protect customers against fraud, scams, financial and cybercrime, but as Ms Warren points out, scams are least effective when people stop and check, and then reject.
“While the Bank’s technology is designed to help detect and prevent fraudulent activities, it is crucial for customers to take proactive steps to protect themselves. It is imperative that they know what to look out for.” Ms Warren shares top tips for small business owners on protecting their business from scams.
Know what to look out for
Be suspicious of investment opportunities that sound too good to be true, because they probably are, according to Ms Warren. Scammers tend to contact prospective victims via phone, social media or sponsored ads.
“Investment opportunities that offer high returns with little or no risk are likely fake and coming from a scammer. Be wary of any unsolicited online contact, including people reaching out via social media, sponsored ads or any opportunities endorsed by public figures and popular TV programs,” Ms Warren added.
Scammers also use AI technology to impersonate well-known public figures who may appear to endorse a particular investment opportunity, and these may be used to give a false sense of legitimacy.
Customers are advised to sense-check investment opportunities with friends and family before committing to anything, as they may help identify warning signs.
“You can also research and check reviews by searching the investment name with the word ‘scam’ and consult ASIC’s list of companies you should not deal with by using the ASIC search portal,” Ms Warren said.
Customers can also understand how to check if a company or a person is licensed on MoneySmart.
Train and educate your staff
Making sure business owners and their staff are on top of the latest scam and cyber threats is imperative.
“When it comes to any scam, people are the first and very important line of defence, so it’s important to ensure you encourage staff to question and escalate payment requests,” Ms Warren said.
It’s important that small business owners and staff have basic cyber hygiene such as strong passwords, multi-factor authentication and awareness of phishing scams.
The Cyber Wardens program, which was created in partnership between CBA, Telstra and the Council of Small Business Organisations Australia (COSBOA), is specifically designed to help SMEs respond to the risks and support them to build an effective culture of cyber security.
Put the right processes in place
According to Ms Warren, processes play an important role in helping reduce the impact of scams.
“You should check with the beneficiary the details of any large payments in person or by calling a verified number and especially if the beneficiary is requesting to amend their banking details. No single person should be responsible for making payments, so adopt strict separation of duties, using multiple authorities to make and approve payments but also to change beneficiary details,” she said.
Businesses are also advised to restrict how much information they reveal about their suppliers and staff on public websites and social media.
Take advantage of technology
While scammers use increasingly sophisticated tactics to target unsuspecting small businesses, technology can also play an important role in preventing attacks.
Leveraging technology does not have to be complex but it can be very effective in preventing scams and cyber-attacks, according to Ms Warren.
“Promptly installing software updates, enabling software auto-updates and installing a reputable antivirus program can help reduce the impact of malicious software designed to tamper with online banking payments,” she added.
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