Over half of Australian small-business owners are concerned their business will be scammed, yet a quarter do not have processes in place to prevent the latest wave of scams hitting our shores, according to new research.
The Westpac State of SME Scams Report found small businesses are paying a hefty price to scammers; on average losing $38,845 and recovering much less than half (44 per cent). Almost half (46 per cent) of small businesses suffered additional financial consequences after the incident, most commonly having to invest significantly in improved scam protection (25 per cent).
Despite the financial implications, two-thirds of small-business owners are not training staff in scam awareness and prevention and three in five don’t believe they need to invest more into staff development to prevent scams.
Ganesh Chandrasekkar, General Manager of SME Banking at Westpac is encouraging small businesses to think about their people as the most effective defence against scams.
“While most small businesses are confident they can identify scams, many of the latest scams we’re seeing, like business email compromise scams and remote access scams, are so well disguised it takes a lot of expertise to recognise and safely avoid them,” Chandrasekkar said.
“The research reveals scams are not only money-wasters, they are time wasters too. On average, it takes small businesses 33 days to rectify a scam and 42 per cent of business owners said they lost valuable time that should have been spent in their day-to-day operations. With increasingly sophisticated methods being used to target small businesses, causing financial and reputational hardship, it’s important business owners strengthen their defences. A good start is putting more resources into education and training to increase awareness among staff.”
The findings show the most frequent forms of scams encountered by small businesses are phishing followed by false billing and invoice, and domain name renewal scams. It’s those relating to false billing and invoicing which are the most effective, impacting one-third of small businesses today.
“Scam shame” is a common emotional side effect, affecting two-thirds of small-business owners who have been scammed. Two in five small business employees were also worried they would lose their job when they realised their business had been impacted.
The results show the consequences of being victim to a scam are not just internal facing, as a third of small businesses also faced brand and cultural repercussions, with 15 per cent reporting their clients were negatively impacted.