2016 Small Business Fraud Report

Motivated by opportunity and greed, fraudsters have found ripe targets in micro and small businesses.  Fraudsters are succeeding by deploying some of the same strategies that have worked when targeting consumers, while also developing new approaches designed specifically for compromising businesses’ data and financial accounts.  Yet compared to fraud affecting consumers, the typical fraud amount is twelve times greater when a micro or small business is victimized.   Because of the potential for substantial fraud losses to be incurred by victimized businesses, some FIs and issuers find themselves forced to choose between absorbing the loss and facing their small business banking clients in court.  Regardless of who wins in court, the only real winner is the fraudster.     

Key questions addressed in this report:

• How often does fraud on small business accounts occur?
• Which types of small business accounts are affected by fraud?
• What are the factors contributing to fraud on small business accounts?
• What can FIs and issuers do to prevent fraud on small business accounts?
• How can small businesses and their financial service providers detect fraud more quickly?
• How do small businesses react to cases of fraud on their financial accounts?

The data in this report came from online survey responses from 1,000 business payment decision-makers and influencers. Survey respondents work for companies in two segments: 500 respondents work for micro businesses ($100,000 to under $1 million in annual revenue) and 500 respondents work for small business ($1 million to under $10 million in annual revenue). The survey was fielded in February 2016.