Monthly Archives: May 2025

Protect your small business against fraud with secure payment systems

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“This will end my business operations.”

“I can’t afford to stay open.”

“I am just trying to operate my business.”

Vermont small businesses have reported substantial losses from scams. With more than 76,000 small businesses in the state, representing 99% of Vermont businesses and employing 60% of Vermont’s employees, small businesses are the backbone of Vermont’s economy. We can’t afford for businesses to experience scams. And yet, annually, businesses increasingly encounter new and different scam variations.

When businesses are scammed operations are at risk to be shut down. Their consumers are impacted, too. Whether the scam involves the breach of consumer personal information on file with the business or impacts individuals directly, such as when real estate sales transactions are intercepted. Being aware of the scams is one step to prevention. Remaining vigilant about the services, technologies, and training available to businesses has become even more important.

Learn more about the types of scams impacting businesses. [Link to blog outlining the scams, w/ pie chart of Top 10 impacting businesses]

In a digital age, protecting your small business against fraudulent activity can be difficult, but there are multiple safeguards available to help you avoid scams, protect your business, and keep your customers safe.

Payment Card Industry Security Standards Council (PCI Compliance) are standards outlined for the financial industry to protect data and establish safe payment systems worldwide.

  • PCI compliance of a business payment system helps to protect personal information.

Multi-Factor Authentication can help ensure payments are legitimate.

  • Requires users to provide more than just a password to confirm their identity.
    • Information will be something the user has, like a one-time verification code.

Payment Gateways are services that administer electronic payments (Ex. PayPal, Stripe, Square).

  • Encrypts customer information.
  • Sends encrypted payment information between banks.
  • Intended to safeguard the information of all parties involved in the transaction.

Payment Processing Systems are the systems where payments are processed, or the Point-of-Sale system (POS), like a terminal or similar software.

  • Secure payment processors use chip readers and biometrics to authenticate payments.

Fraud Detection and Prevention implementation adds another layer of protection.

  • Use the Address Verification Service (AVS) to compare the customer billing address to the customer address that the card issuer has on file.
  • Require that consumers enter the Card Verification Value (CVV) to reduce the risk of fraudulent use.
  • Monitor transactions: Regularly review transactions for suspicious activities and set up alerts for unusual patterns.

Train Staff: Your best defense is an informed workforce.

  • Train your staff to properly use payment systems and follow security standards for every transaction, including internally dispersed funds.
  • Stay informed about how common frauds may affect your business and make sure all employees are aware about how to avoid them.

 Resources

The Vermont Small Business Development Center (VtSBDC) provides free guidance to Vermont small business owners.

The Small Business Association connects businesses to state and federal resources and an online learning guide.

When a fraud incident occurs, you can report it to the Consumer Assistance Program. This office tracks scam trends to educate the public and can provide recovery support resources.

References:

https://consumer.ftc.gov/articles/use-two-factor-authentication-protect-your-accounts

https://www.ftc.gov/business-guidance/credit-finance/payments-billing

https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/merchant-processing/pub-ch-merchant-processing.pdf

https://www.fiscal.treasury.gov/otcnet/card-processing.html

https://www.federalreserve.gov/paymentsystems.htm

https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-VT.pdf

https://www.sba.gov/district/vermont

Top Scams Reported by Businesses in 2024

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Of the 3533 scams reported to the Consumer Assistance Program (CAP), 191 were submitted by Vermont businesses. The five most common scams for businesses include: fake orders, utility disconnection threats, imposters of business personnel, government imposters, and business identity theft.

The top scam for businesses to look out for is Order Fraud (fake orders of goods or services):

In 2024, CAP received 65 reports from Vermont small businesses experiencing fake order requests, in which scammers pose as customers initiating purchases. The purchases could be of business’ products, or of the services the business provides. In this scam, businesses are typically offered fraudulent forms of payment (fake checks, stolen credit cards). Sometimes businesses fulfill orders that are never paid for because the scammer’s check bounces, and stolen credit card charges are reversed. 

Sometimes, scammers request overpayments to be sent elsewhere, such as when a scammer sends a fake check to cover the cost of a wedding service but sends too much money and asks the wedding vendor to redirect the overpayment to fake wedding vendor by peer-to-peer payment services (PayPal Friends/Family, Venmo), or wire transfer. In 2024, several Justices of the Peace reported fake requests for wedding officiant services. Scammers similarly targeted realtors by claiming to be property owners seeking a company to help them sell their homes or land. Scammers used actual names listed on deeds, making it difficult for realtors to verify ownership.  

To reduce fraud incidents, always use multiple methods to verify the legitimacy of a potential buyer. While it may be difficult, take steps to verify. Especially for large orders, use address verification services, card verification value checks (CVV), and multifactor authentication for consumer accounts. Do not accept overpayments. Instead, ask for the correct payment amount to be reissued. You never want to be in the position of paying expenses on the consumer’s behalf when that is not a service you provide.

CAP further encourages businesses in Vermont to take the following steps to help prevent scams: 

Train Your Employees: Your best defense is an informed workforce.

Verify Invoices and Payments: Check all invoices closely. Never pay unless you know the bill is for items that were actually ordered and delivered. Train your staff to do the same.

Be Tech-Savvy: Don’t believe your caller ID. Imposters often fake caller ID information so you’ll be more likely to believe them when they claim to be a government agency or a vendor you trust.

Know Who You’re Dealing With: Never send money to parties you cannot verify. Check registration history, recommendations, and confirm contacts by calling. Before doing business with a new company, search the company’s name online with the term “scam” or “complaint.”

Businesses are encouraged to call CAP to report scams, ask questions, and get resources.
ago.vermont.gov/cap
1-800-649-2424