Tips for Protecting Your Business from Fraud
To scammers, small and medium-sized enterprises are particularly attractive targets. Fraudsters can drain funds from your company more quickly and effectively than they can from an individual due to vulnerabilities like weak cybersecurity, inadequate internal oversight, and the ease of hiding a fraudulent charge amid a high volume of monthly business transactions.
A 2025 TransUnion survey found U.S. business owners estimated losses of $114 billion, highlighting the urgent need for improved cybersecurity and business fraud prevention. To help you stay secure, we’ll explore common fraud types and provide you with six practical tips for improving your small business fraud protection.
But before delving into fraud, you may want to take a pulse check on how your business ranks for possible fraud instances. Complete our quick Business Fraud Risk Meter for an assessment and tailored insights.
Common types of business fraud
While fraudsters can use many different tactics to trick you into providing them with sensitive information and funds, here are six of the most common scams used to target small and medium-sized businesses.
- Business email compromise (BEC) - Scammers impersonate CEOs, IT staff, and vendors via email to request payment, gift card purchases, or passwords. This type of scam is the most prevalent, resulting in $3 billion + losses in 2025 alone, according to the FBI’s IC3 report.
- Fake invoices - Fraudsters send fake invoices or requests for payment for goods/services that were never provided.
- Employee/internal fraud - From submitting extra expenses to embezzling, employees are a common source of fraud.
- Check fraud - This type of fraud involves writing bad checks to steal goods and services, or tricking you into wiring money to the scammer (e.g., overpayment scams).
- Impersonation - Scammers pose as tech support or government agencies to convince you to provide sensitive information or pay up.
- Cyber attacks - This can involve data breaches, ransomware, malware, supply chain attacks, and more.
Learn more about business fraud types and range of other topics in the Business section of our Security and Fraud Center.
Tip #1: Educate employees on fraud risks
The number one way to prevent and protect your business from fraud is to educate your employees. The more they know about fraud risks, attack types, and management strategies, the better equipped they will be to thwart scammers.
Fraud attacks can target anyone from the CEO to admin staff, making fraud and awareness training essential for all employees. Consider covering topics like common fraud tactics, how to recognize fraud, and the use of a “pause and verify” mindset. By creating fraud-prevention policies and regularly encouraging staff to learn more and take action, you can make fraud awareness part of your company culture.
Tip #2: Strengthen internal controls
Improving cybersecurity for small businesses starts with taking a hard look at your software and system controls, as well as your company policies. Everything from who has access to customer information to how the software defines employee roles can impact your fraud risk. Proactive security steps you can take include:
- Implementing/updating roles to limit access to sensitive customer and financial information
- Separating financial responsibilities (i.e., one employee approves an expense, while another issues payment)
- Requiring multi-level approvals for payments and transfers
- Limiting access to physical business records and financial assets (i.e., safes or credit cards)
- Updating policies and procedures for clear guidance on performing job tasks
By strengthening your internal controls like this, you can prevent a great deal of employee fraud, encourage accountability, and be able to locate the source of fraud more quickly.
Tip #3: Verify payments and invoices
As a business, you may be processing well over 1,000 payments each month, which makes it all too easy for a scammer to slip in a fake invoice. To improve payment fraud prevention, it's important that each invoice and payment is carefully scrutinized and verified. In particular, look for suspicious invoices, urgent payment requests, and unknown vendors.
Even if you know a particular vendor or supplier, it doesn’t mean the invoice you receive is legitimate. Fraudsters often use email spoofing or domain impersonation to mimic trusted partners and divert your funds to their accounts. To defend against these tactics, stay alert for phishing attempts and deceptive web portals designed to harvest your payment data or facilitate business impersonation.
Tip #4: Use secure payment methods and tools
In addition to verifying that each invoice and payment is valid, you’ll also want to pay close attention to the payment method used. While requests for crypto payments and gift cards are red flags for fraud, scams can also use trusted business payment methods. According to the 2025 IC3 report, 86% of BEC scams used wire transfers or ACH payments.
Fortunately, enhancing your ACH fraud protection is easy, as many financial institutions, including Empower FCU, offer tools to optimize business fraud prevention. Set up account alerts and use ACH controls, such as blocks and filters, to keep your business accounts protected. And remember to avoid nonsecure digital payment platforms and apps, which may lack encryption or FDIC protection.
Tip #5: Protect digital access points
Think about the current security you have in place: how easy would it be for a scammer to gain access? Preventing fraud that originates from cyberattacks starts with protecting your digital access points. Proactive measures you can adopt include:
- Using unique, strong passwords
- Enabling multi-factor authentication (MFA) on all key business accounts
- Keeping your software up to date
- Implementing strong firewalls to protect your network and devices
- Using encryption to protect your business data
- Performing regular audits and deleting former employee logins
- Regularly backing up data and monitoring for suspicious activity
Given that the average cost of a data breach for U.S. businesses in 2024 was $4.9 million, improving your cybersecurity is crucial in protecting your business from fraud.
Tip #6: Monitor accounts and set alerts
No fraud prevention tips list would be complete without discussing active monitoring. The quicker you can spot fraud, the better your chances of limiting the financial damage. Start by setting up account alerts for both your internal systems and any of your business banking accounts. In addition, you should routinely review your account transactions, as alerts will not catch all suspicious activity.
Once you do find potential fraud, it's important that you act quickly. So you should craft a comprehensive fraud response plan now, long before a scammer hits. This combo of monitoring and quick action can help bolster the financial security for businesses.
Protect your business bank account from fraud
Keeping your financial accounts secure is crucial for small business fraud protection. With comprehensive business banking services from Empower FCU, you get access to the tools you need to help prevent fraud. Our digital banking platform allows you to review your account at any time, from any location, and enhanced login security tools like two-factor authentication (2FA) and voice authentication help safeguard your account. Explore Empower FCU’s security and fraud prevention features to learn more.