Modern Scams, Real Losses: What Every Small Business Owner Needs to Know

In early 2025, a Florida-based construction company received an urgent email from what appeared to be an executive at a partner firm. The message instructed a finance employee to wire $60,725 to a new account for an ongoing project. The request looked legitimate and seemed to come from a familiar contact. But the request was fake, and the executive’s email had been hacked.

The money was wired and immediately disappeared never to be seen again. The scam remains under investigation, and the funds are unrecoverable.

Scams like this don’t just happen to giant corporations. Small and medium-sized businesses are now prime targets. With tighter resources, smaller teams, and limited IT infrastructure, they present an appealing opportunity for modern fraudsters. From AI-driven impersonations to hijacked emails and phony vendors, the threats are both growing and evolving in sophistication and complexity.

Let’s explore the most common scam types facing business owners today, how these threats are changing, and what steps you can take to protect your business.

The New Era of Business Email Compromise and Phishing

Business Email Compromise (BEC) is now one of the costliest and most common scams affecting U.S. businesses. In these attacks, scammers spoof or gain access to real business email accounts, such as executives or vendors, and then use them to request fraudulent payments or sensitive data.

The FBI’s Internet Crime Report logged more than 21,000 BEC incidents in 2024, totaling over $2.7 billion in losses. Unlike spray-and-pray spam, these emails are often highly personalized. A hacker may spend weeks studying your email habits before launching an attack, making their request look authentic and urgent.

Companies are tricked into wiring money to fraudulent accounts, sending W-2 forms to fake auditors, or updating bank details for “trusted” vendors. And once funds are sent, they’re often moved through a web of overseas accounts, making recovery nearly impossible.

One of the best defenses is multi-step verification. No large financial transaction should ever occur without a phone call or in-person confirmation, especially when bank details are changing.

Ransomware: A Disruption You Can’t Afford

Imagine walking into your office one morning and discovering every computer is locked. A message demands $25,000 in Bitcoin to restore access, or you risk losing all of your data. That’s ransomware, and it’s been wreaking havoc on small businesses across the country.

In 2024, the FBI recorded more than 3,100 ransomware incidents, and while that number likely underrepresents the true scope (many cases go unreported), the damage can be devastating. Small businesses are particularly vulnerable due to underfunded IT teams and inconsistent backup practices.

Ransomware doesn’t just cost money, it halts operations. Employees are locked out, orders can’t be processed, and client trust takes a hit. Even paying the ransom doesn’t guarantee restoration. That’s why having offline backups and robust cybersecurity protocols in place is no longer optional.

Fraudulent Vendors and Overpayment Traps

If you’re running a business, chances are your accounts payable department receives dozens of invoices a week. Scammers are betting you won’t catch the fake one.

One common trick is to impersonate a vendor or supplier and send a legitimate-looking invoice, often for small amounts that don’t raise flags. Another is the classic overpayment scam, where someone sends a check or payment for more than the billed amount and then asks for a refund of the difference. The original payment later bounces, leaving your business out the money.

According to the FTC, $789 million in losses were reported in 2024 due to government and business impersonator scams, many of which started with a bogus invoice. Training your staff to follow a vendor verification process, like calling to confirm changes in banking information, or requiring two sets of eyes for new vendor payments, is crucial to preventing these losses.

Insurance Fraud and Gaps in Coverage

Not all fraud comes from outside your business. Sometimes it arrives wearing a suit, offering you a “great deal” on insurance coverage. Fake insurance agents have been caught selling commercial policies that don’t exist, pocketing the premiums and leaving businesses exposed.

Even legitimate policies can leave you unprotected if you’re not aware of what’s included, and more importantly, what isn’t. For example, most basic commercial policies do not cover social engineering fraud (when you’re tricked into voluntarily sending money). To get protection from that, you’ll likely need a cyber liability or crime policy.

Before purchasing or renewing any business insurance, confirm your agent’s licensing, ask detailed questions about cyber and fraud coverage, and request documentation.

AI Scams and Deepfakes: The Next-Level Threat

The rise of generative AI tools has taken scams to a terrifying new level. In early 2024, the CEO of WPP, the world’s largest advertising firm, was nearly defrauded by a scammer using a deepfake video of him requesting an urgent payment.

Small businesses might think they’re below the radar for these high-tech schemes, but as AI tools become more accessible, so do these types of attacks. A scammer only needs a few seconds of voice or video from your website, social media, or YouTube channel to clone your voice or image.

Voice cloning has been used to trick staff into transferring funds, believing they were speaking to a supervisor or business owner. These scams are often paired with spoofed email addresses or phony documentation.

The takeaway? Establish internal protocols. If your team receives a high-stakes request, especially one tied to urgency and secrecy, they should know how to verify through secondary channels, regardless of who they think is asking.

What Small Business Owners Can Do Today

There’s no silver bullet for scam prevention, but there are clear steps you can take to harden your defenses.

First, create a fraud response plan—just like you would for a fire drill or data breach. Outline who’s responsible for verifying suspicious communications, what steps to follow if you suspect fraud, and who to contact.

Second, review your insurance policies now. Contact your agent and ask:

• Does my policy cover cyberattacks or social engineering scams?
• Do I have crime coverage that includes third-party fraud?
• Are employees covered if they fall for phishing or invoice fraud?

Third, educate your team. Conduct regular staff training on phishing emails, fake invoices, and voice-based scams. Give employees a script for how to respond when they receive a suspicious request from a “boss” or “client.”

Fourth, audit your payment processes. Require verbal confirmation for any change in vendor details. Mandate two-person approval for wire transfers. And always verify out-of-the-blue financial requests via a secondary method.

Lastly, install call verification and email authentication tools. Many IT providers now offer software that detects spoofed domains, auto-blocks risky emails, and flags unusual financial activity.

Running a small business has always required grit, strategy, and hustle. But these days, it demands digital awareness as well. Today’s scammers don’t care about the size of your company; they only care about whether your defenses are weak or strong.

By understanding how fraud has evolved and proactively shoring up your people, processes, and protections, you can stay one step ahead of the con artists.

FAQ: Scam Protection for Small Businesses

Q: What should I do if I think our business fell for a scam?

A: Report it to the FBI’s Internet Crime Complaint Center (IC3) at ic3.gov, notify your bank immediately, and contact your insurance agent to review potential coverage.

Q: How do I know if our insurance policy covers social engineering fraud?

A: Check your commercial crime or cyber liability policy. Many standard policies don’t include this unless it’s added as an endorsement. Your agent can confirm specifics.

Q: Are AI voice or video scams insurable?

A: Some cyber liability policies are starting to address deepfake-related fraud, but coverage varies. Ask if impersonation fraud or emerging technology threats are covered.

Q: How often should we update our fraud response protocols?

A: At least annually—or anytime a new scam trend emerges. Incorporate learnings from recent fraud cases or industry alerts.

Q: Can software really prevent email or invoice scams?A: Yes, to a degree. Email authentication tools like SPF, DKIM, and DMARC can reduce spoofing. Anti-phishing software and transaction monitoring tools also help.

Need to learn more about how insurance can help protect you from scams?

Our agents are ready to help, so contact us to learn how we can customize your insurance policies to meet your needs.

*Disclaimer: We offer content for informational purposes; Co-operative Insurance Companies may not provide all the services or products listed here. Please get in touch with your local agent to learn how we can help with your insurance needs.

Sources

FBI. FBI Releases Annual Internet Crime Report. https://www.fbi.gov/news/press-releases/fbi-releases-annual-internet-crime-report

Fox 13 News Tampa Bay. Fraud and romance scam cost Florida companies more than $60,000: FDLE. https://www.fox13news.com/news/fraud-and-romance-scam-cost-florida-companies-more-than-60000-fdle

FTC Consumer Advice. Top Scams of 2024. https://consumer.ftc.gov/consumer-alerts/2025/03/top-scams-2024

NAIC. Insurance Topics – Insurance Fraud. https://content.naic.org/insurance-topics/insurance-fraud

The Guardian. CEO of world’s biggest ad firm targeted by deepfake scam. https://www.theguardian.com/technology/article/2024/may/10/ceo-wpp-deepfake-scam

Trustwave. FBI 2024 IC3 Report: Phishing Soars, Ransomware Batters Critical Infrastructure as Cyber Losses Climb. https://www.trustwave.com/en-us/resources/blogs/trustwave-blog/fbi-2024-ic3-report-phishing-soars-ransomware-batters-critical-infrastructure-as-cyber-losses-climb/