Be proactive to combat small business fraud

By Laura Jones, Executive Vice-President of the Canadian Federation of Independent Business.

Last year, I received an e-mail telling me that I owed the Canada Revenue Agency money. I’d seen lots of e-mail scams written in poor English asking me to send money to faraway places, but this one kind of sounded like government. More recently, someone from an Ottawa number called posing as a CRA agent threatening jail time. At the time, I felt silly that I would wonder for a moment whether these were scams.

March is Fraud Awareness Month, and to help raise awareness the Canadian Federation of Independent Business conducted a survey of business owners that gives unique insight into how prevalent the problem is.  One in five business owners have been a victim of fraud in the past year, and another 30 per cent have had fraud attempted on their businesses. Not surprisingly, over 40 per cent did not report the fraud that is considered too time-consuming for its potential benefit.

The estimated average cost of fraud is $6,200, and most — 92 per cent — do not recover the full cost. The most common types of scams include payment fraud, e-mail scams and phishing (designed to trick victims into providing sensitive information or transferring money), and directory fraud where payment is demanded for a service that was never ordered such as a magazine or phone directory listing.

Some other examples of fraud from business owner comments to the survey:

“Our e-mail was hacked into, telling one of our customers to pay their invoice to a U.S. bank account.”

“Someone hacked into our phone system and made overseas calls to a pay-per-minute site until it was red flagged by our phone provider and they shut down the service, but not until over $3,000 had been charged against our account, which we had to pay.”

Businesses spend an average of $2,900 a year on fraud prevention, including buying computer software and cameras, but one obvious thing that many business owners overlook is talking to their employees about fraud and enlisting their help to prevent it. Following are some tips to start the conversation:

1)     Payment fraud

Scammers tamper with point of sale terminals to steal money or customer information. To prevent this:

  • Keep terminals put away when not in use, and secure them when closing.
  • Don’t let a fraudster posing as a customer block your view of the terminal.
  • Check terminals regularly for pry marks, missing screws or broken parts.

2)     Phone and e-mail scams

  • Hang up the phone or delete the e-mail if you suspect a scam.
  • Know that CRA and your bank will not ask for confidential information over the phone.
  • While the CRA may take legal action to recover money owed, they will not threaten you with immediate arrest or a prison sentence.
  • If you want to validate whether something is legitimate, go to the government website to find a contact number and call to confirm.

3)     Directory Scams

  • Carefully inspect the company name on the invoice, as often it will seem familiar but there will be a slight variation from the legitimate directory name.
  • Do not call the number on the invoice you have received if you have doubts; instead, do a separate search for the actual company’s phone number. Call them and reference the invoice number to confirm the invoice is valid.

Fraudsters are getting more sophisticated and a small investment in learning what the current scams are can save you lots of headaches and, in my case, give me extra confidence as I hang up the phone on CRA imposters.

For more educational tools including posters, articles and RCMP fraud videos, visit CFIB’s website at

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