Small Business Fraud is on the Rise – 3 Things You Can Do Right Now To Protect Your Business

The problem is widespread. A 2026 national survey of more than 500 small-business owners found that 72% experienced fraud, scams, or ransomware during the previous year. Payment fraud and email phishing were among the most frequently reported threats, and businesses that experienced payment fraud reported average losses of about $60,000.

Centrust Bank® wants to help you keep your business safe. With that in mind, we've put together a list of practical steps that may help protect your company from cybercriminals.

1. Secure access and verify requests

Strong account security is important, but protecting a business from fraud requires more than passwords and antivirus software. Many scams succeed because they exploit ordinary business processes. Establish clear procedures for handling these requests and make sure employees know when they should pause to verify them.

Business email compromise is a particularly important example. Criminals may compromise a legitimate email account or create a convincing imitation of a familiar address and then use it to request payments, sensitive information, or changes to account details. Increasingly sophisticated AI tools have the ability to make these impersonation attempts even more convincing by producing realistic emails and messages. An unusual request should never be treated as legitimate simply because the message looks or sounds familiar.

Providing your employees with regular training in recognizing and reporting phishing scams and other cases of fraud is a great way to protect your business. It's also a good idea to put safeguards in place for employees. For instance, you may require them to confirm a request to change vendor information, or require them to initiate a large payment by contacting the person directly through a phone number that's on file.

2. Payroll protection

Payroll fraud may be difficult to spot because fraudulent payments often look like ordinary payroll expenses. The Association of Certified Fraud Examiners’ 2026 Occupational Fraud Report found that payroll fraud occurred in 8% of organizations with fewer than 100 employees and 13% of organizations with more than 100 employees. The report also found that payroll fraud schemes had a median duration of 13 months before they were detected, with an average of $4,800 lost each month before discovery.

Business owners don't need to manage every payroll transaction personally, but they should understand how their payroll system works and establish clear accountability for reviewing it. Regularly reconcile payroll records, review changes to employee pay rates and direct-deposit information, and make sure that someone outside the payroll process reviews reports for unusual activity.

3. Verify before you pay

Invoice fraud may take on several forms. A scammer may impersonate a legitimate supplier, send a convincing fake invoice, or compromise an employee's or a vendor's email account and request that a payment be sent to a different account. Check fraud has also been a very real problem for small businesses for decades, including schemes in which criminals alter checks to change the payee or payment amount. Since these transactions often look like routine business expenses, fraudulent payments may not be discovered until after the money has left the account.

Establish a consistent process for verifying invoices and payment changes before approving them. Employees should confirm that the goods or services were actually ordered and received and independently verify any request to change a vendor's banking information. For significant or unusual payments, a phone call to a known contact using information already on file may provide an important second layer of verification. Taking a few extra minutes to confirm where the money is going may help prevent a fraudulent request from becoming a costly loss.

Centrust Bank customers may also enroll in Positive Pay, a powerful fraud prevention tool used by business customers to protect against check fraud. Centrust Bank’s Positive Pay Service helps detect suspicious transactions, reducing the risk of financial loss and safeguarding the reputation of your business.

FAQs

How can a small business protect itself from fraud?

Small businesses may reduce their risk of fraud by combining employee training, strong account security, and clear procedures for approving payments and sensitive requests. Use multi-factor authentication for important accounts, require unique passwords, limit access to sensitive information, and keep software and security tools up to date. Businesses should also establish procedures for verifying invoices, payment requests, and changes to vendor banking information.

What are the most common types of small business fraud?

Small businesses may face many types of fraud, including fake invoices, phishing, business email compromise, account takeover, payment fraud, check fraud, and business impersonation scams. Some schemes attempt to steal money directly while others try to obtain passwords or other information that might be used to provide access to business accounts.

How can businesses prevent invoice fraud?

Businesses may reduce invoice fraud by creating a consistent process for approving purchases and invoices. Employees should know which vendors the company normally works with, what purchases have been authorized, and who has authority to approve payments. An unfamiliar invoice should not be paid simply because it looks professional or includes an urgent payment request. Be especially careful when a vendor suddenly provides new bank account information. Verify the change through a separate communication channel using contact information already on file rather than replying to the message that requested the change.

What is business email compromise?

Business email compromise, or BEC, is a type of fraud in which criminals use compromised or spoofed email accounts to impersonate a business owner, employee, vendor, or another trusted contact. The goal is often to convince someone to transfer money, change payment information, or provide sensitive information.

How can a business protect its bank account from fraud?

Start by limiting who has access to business banking accounts and giving employees only the permissions they need. Use multi-factor authentication, unique passwords, and account monitoring, and establish internal controls for initiating and approving payments. Businesses should also ask their bank about available fraud-monitoring and payment-control services that may fit their operations.

What should a business do if it discovers fraudulent activity?

If fraudulent funds have been transferred, contact the financial institution involved immediately and ask to have the transaction recalled or reversed. The FBI recommends contacting the originating financial institution as soon as fraud is recognized because a prompt response may improve the chances of recovering funds.

The business should also secure any compromised accounts or credentials, preserve relevant emails and financial records, and determine how the fraud occurred. Depending on the circumstances, businesses may need to report the incident to the FBI's Internet Crime Complaint Center (IC3), the Federal Trade Commission, or local law enforcement. If an employee's credentials were compromised, reset affected passwords and review other accounts that may have been exposed.