Study Says One in Three Businesses Experience Attempted Fraud
Prince George, B.C.- Fraud Prevention month may be wrapping up, but fraud is not going away.
A new study by the Canadian Federation of Independent Business victimized small businesses lost, on average, $6,200 in the past year.
The report indicates one in three small businesses has experienced one or more fraud attempts in the past year, and one in five fell victim. According to the study only 8% of those victimized recovered their full financial costs.
“Fraud is a serious concern that can disrupt regular operations. Victimized small businesses have little chance of recovering their losses, so it’s critical that employers understand how to protect themselves,” said Plamen Petkov of CFIB. “While the money is significant, business owners have told us that the non-financial costs have an even greater impact on their business.”
Lost time (84 per cent), negative emotional impacts such as stress (61 per cent) and negative impact on staff morale (29 per cent) were cited as the top non-financial impacts of fraud.
The most common type of fraud causing a loss for small businesses is fraudulent payments. The most common attempted frauds are email scams and phishing, followed by directory fraud, malicious software and phone scams. Businesses in the retail and hospitality sectors are more likely to experience financial losses from fraud, while businesses in the wholesale sector are most likely to experience fraud attempts.
Small businesses spent an average of $2,900 on fraud prevention in the past year; however, only three in ten small businesses train their employees to identify fraud.
“The threat of fraud is not going away,” adds Petkov. “When it comes to preventing fraud, awareness and vigilance are key. Most small businesses take some preventive measures; they can do even more by training employees to spot signs of fraud.”