Business Insights

How to reduce business fraud risk — What every small business should know

Fraud attempts are increasingly common but simple, effective measures to help prevent fraud are well within reach.

Fraud can come from anywhere. Criminals often mimic customers, suppliers, or even members of your own team. And fraud isn’t just a financial risk — it can damage your reputation.

Fortunately, a lot of the measures you can take are simple and cost-effective to implement. Here are just a few ways you can help stop fraud before it happens.

1. Know what fraud looks like

   Vigilance is your first and, often, strongest line of defense. Simply staying aware that any communication could be fraudulent can help you avoid issues. After all, a lot of business fraud stems from human error, not vulnerability in technology.

   That makes it important to recognize common scams such as fake invoices, overcharging, stealing customer payments, and smishing and vishing. Look carefully at any communication before clicking links or especially before sending payments or sensitive information.

   Even if an email or text message appears to come from someone you know and trust but feels “off,” pause and investigate. The Federal Trade Commission (FTC) provides up-to-date guidance on what to look for when it comes to blocking scammers.

2. Build strong processes

   Protection requires more than alertness. It means creating strong systems and processes for both paper and digital payments. Simple steps include:

   • Requiring at least two signoffs for large payments.
   • Taking the time to confirm unusual requests. Use STOP-CALL-CONFIRM: STOP the process, CALL the requestor at a known number (not the number in the message), and CONFIRM the request is legitimate.
   • Keep passwords safe. Never share any password with anyone, regardless of how trustworthy you think that person might be.
   • Monitor payment methods. Be wary of urgent requests for wire transfers, gift cards, or crypto.

3. Train your team

   The bigger your business grows, the more important it is to build a culture of fraud awareness among your employees. That way, they know what to look for when it comes to identifying attempts to defraud your company.

   • Teach everyone how to spot phishing, spoofed emails, fake invoices and vishing/smishing.
   • Share real examples and encourage reporting of anything suspicious.

   For deeper training, the Small Business Administration (SBA) offers cybersecurity tips to help your team identify, prevent, and report fraud.

4. Use cyber tools to back you up

   Human awareness is critical but updated cyber tools strengthen defenses against a cyberattack. These measures include:

   • Installing a firewall and antivirus software to help block malware.
   • Update software promptly — patches often fix security weaknesses.
   • Review activity logs for unusual login times or file access.

   For more guidance, consult the Cybersecurity and Infrastructure Security Agency (CISA) Small Business Guidance to learn more.

5. Use .gov resources

   The federal government provides a range of tools to help businesses identify threats and stay protected:

   • Cybersecurity & Infrastructure Security Agency (CISA): Free scans, checklists, and fraud prevention tools at www.cisa.gov/cyber-guidance-small-businesses
   • The Federal Trade Commission (FTC): Detailed guidance on avoiding scams.
   • The Small Business Administration (SBA): The SBA supports small business with resources on preventing loan fraud.

   Regions also offers resources to help protect your business from fraud. Learn more about how we can help support your efforts.

6. Protect your money and reputation

   Fraud prevention protects more than your finances. It helps safeguard customer information and your good name.

   If applicable to your small business, use the FTC’s Red Flags Rule to build a comprehensive identity theft detection checklist. Report fraud promptly to the FTC, SBA Inspector General, and local authorities.

In short, fraud prevention is about awareness, strong processes, ongoing training, solid cybersecurity practices, and using free government tools. A few smart steps can significantly reduce your risk and help protect your customers, employees and future.