Half of Canadian small businesses affected by fraud: Survey

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Half of Canadian small businesses have been the victim of fraud or attempted fraud over the last year, a new study found.

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The Canadian Federation of Independent Business said 50% of businesses experienced fraud or attempted fraud over the last 12 months.

A third of those suffered financial losses and impacted business owners have lost $7,800 on average over the last year.

“Whether you’re a consumer, a mom-and-pop shop or a big industry player, we’ve all been impacted by fraud in some shape or form,” said Corinne Pohlmann, the executive vice-president of advocacy at CFIB. “Dealing with their consequences can be frustrating and time-consuming, especially for small business owners who often don’t have enough time or resources to address this growing issue.”

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Larger businesses are more likely to experience fraud attempts, while the most common fraud attempts include email scams and phishing (85%), text scams (77%) and phone scams (76%).

Fraudulent payments and charge-backs — when a customer falsely disputes legitimate transactions — are more likely to result in business losses for 19% and 16% of businesses respectively. Businesses in hospitality, retail, transportation, personal services and the arts, recreation and information sectors were found to be particularly vulnerable to these two types of fraud.

“For me, the biggest issue with fraud is the constant phone calls about refused payment with a bank or Amazon. It’s unbelievable how many of these I receive several times a day,” a retail business owner in Alberta said.

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Ninety per cent of business owners are also worried that the rise in the use of artificial intelligence will make fraud harder to detect.

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“This research drives home how important it is for the ecosystem to prioritize fraud prevention and detection,” said Joanna Schoneveld, the fraud management leader at Interac. “We are investing in solutions that help business owners stay ahead of an ever-evolving fraud landscape, so their focus can remain on operational growth and customer trust.”

CFIB’s recommendations to governments include enhancing the code of conduct for the payment card industry in Canada and making sure there are resources available to “cyberpolicing” and reporting yearly outcomes.

The federation also wants the government to give small businesses financial assistance to help them invest in IT security and provide advice tailored to small and medium-sized enterprises on preventing cyberattacks.

The survey was conducted online between Aug. 8 and Aug. 21 and included 2,340 respondents. The margin of error was plus- or minus-2%, 19 times out of 20.

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