Source: Unsplash/SOCIAL.CUT.
Australian businesses reported an astonishing $23.2 million in scam losses across 2022, with new data from the consumer watchdog showing small firms are persistently vulnerable to email compromise and false billing scams.
In its report, released Monday, the Australian Competition and Consumer Commission (ACCC) revealed Australians lost a record $3.1 billion in scams in the past year, up from $2 billion in 2021.
While the vast majority of that sum is reflected in personal losses, primarily to investment scams, the data shows a significant increase to the value of business losses reported to Scamwatch.
The government organisation tallied $23.2 million in business scam losses in 2022, up from $13.4 million in 2021, and the $18.4 million in losses reported through a tumultuous 2020.
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The data breakdown reveals big businesses report larger median losses to scams, but it is small and micro businesses that racked up the most significant losses overall.
Small businesses, categorised as those with between five and 19 employees, suffered $5.6 million in losses, a 61% increase compared to 2021. The median loss for those firms was $4,559.
The data suggests medium-sized businesses, with between 20 and 199 employees, fared slightly better. Those firms reported $3.6 million in losses, for a median loss of $4,100.
However, micro businesses with four or fewer employees faced their own dire outcomes.
That sector reported $8 million in losses, 128.6% of the sum tallied by Scamwatch in 2021. Median losses were $3,350.
False billing scams on the rise
For all businesses, investment scams wrought the most financial damage, comprising $9.8 million of the overall business total and causing a median loss of $50,000.
Yet it was false billing scams that saw the most significant uptick over 2022, with reports jumping an astonishing 1,174%, and contributing to $8.6 million in losses.
It is this kind of scam, otherwise known as payment redirection, which “impacts business the most,” said Catriona Lowe, deputy chair of the ACCC.
It occurs when scammers take control of a legitimate business’ email or online accounts and present suppliers with fake invoices, which direct funds to a scammer’s bank account.
The ACCC says an unfortunate group of farmers from Western Australia lost $1 million to this kind of scam in 2022, and it was only discovered when the farmers contacted their business clients over missing payments.
“Businesses need to be vigilant and implement effective monitoring and intervention processes to prevent scammers using their services and stop them when they do,” Lowe said.
“Identity, verification and communication processes need constant review as scammers constantly evolve.”
Small business slow to adopt eInvoicing
Government-led efforts to promote scam-busting systems are underway, but most small businesses are yet to sign on.
Most notable is the eInvoicing system, an initiative that allows businesses to securely send invoices to partners through their accounting software, eliminating the need for insecure email accounts or scanned PDFs.
In February, a Treasury consultation paper revealed just 1% of Australian businesses — or 25,500 of an estimated 2.5 million — had signed up for system.
Although it has enjoyed solid adoption among big businesses, SmartCompany understands the eInvoicing system is yet to crack 30,000 users, with many small enterprises not yet signed up.
Separately, some banks have introduced anti-scam systems.
Commonwealth Bank in February revealed its ‘name and shame’ system, which prompts payers to double-check account numbers and BSBs against their records before firing off payments.
The increased adoption of anti-scam tools is necessary to protect Australian consumers and businesses, Lowe said, while recognising scammers will always try to find a workaround.
“We need to arm consumers with the tools to give them the best chance to identify scams, whilst recognising that humans aren’t going to stop being human any time soon,” she said.
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