Protect Your LLC – How to Avoid LLC Frauds and Scams

Starting an LLC (Limited Liability Company) is easy; running it safely is not always as easy as you think it is. Scammers are all over the place seeking opportunities to hack your business. Starting from bank account hack to tax ID theft, scammers leave no stone unturned to defraud people around the world. LLC owners are well aware of such scams. But what they probably don’t know is what will happen if they become the target.

This article brings a bunch of possible solutions to these problems. These are general tips and can be applied to any LLC, small or medium. However, based on the type of scam, the measures may differ from the general ones. It is highly recommended to consult an expert. Understanding LLC fraud warnings and how to actively protect an LLC allows business owners to reduce exposure and respond before long-term damage happens.

How to Protect Your LLC from Scammers?

Before we head to the protection measures, it is important to understand how scammers work. Though it is a bit tricky to understand their tactics, it is not completely impossible. Scammers around the world take the digital path more often for fraudulent activities than offline.

Tactics Most Scammers Use:

• Fake Invoice: Many scammers use this particular tactic to make easy money from businesses. Small, especially newly formed LLCs, get trapped easily as they have less experience. In some cases, they have fewer resources to find out if it is fake or unauthorised.

• Phishing Email or Text: This is the most common tactic scammers use to get confidential information or access to the business accounts. Most of the phishing emails look normal and professional. They contain a malicious link that helps scammers hack your system/accounts or helps them get access to massive data.

• LLC Scam through Online Media: Online media or social media scams are growing at an exponential rate. Every business has social media pages to gain more customers. Scammers target those pages easily to impersonate. The social media or online media pages are usually more vulnerable than websites or emails. Hence, it is very easy to hack them.

• Impersonation: Another way to scam LLCs is to impersonate someone and claim money for basic needs. For example, someone can impersonate an electric supplier and claim an outstanding bill amount. They usually do this via online channels or over a phone call, and rush the owner to make a wire transfer or else the connection may be disrupted. This is similar to business identity theft. In this case, the imposter tries to get access to credits, loans, and advances in the name of the LLC.

• Embezzlement within the LLC: Small LLCs often face embezzlement from employees. This can occur due to a lack of a background check of the employee. Small-scale LLC employees sometimes have access to the company’s financial documents, assets, and other confidential documents. Hence, it becomes very easy for them to attempt embezzlement within the organisation.

Protect Your LLC from Scammers – Pro Tips

Scammers are unbeatable and unstoppable. From small tricks to big scams, they never stop taking wrong paths to make a chunk of easy money. In some cases, to match their level is impossible. No, this is not a let ‘s-praise-scammers post, but to be aware of their smart moves that any bigshot can fall into. I am sharing some pro tips that can help LLCs to protect themselves from growing scams. These are generic tips and can be stricter based on how small or big the risk is.

1. Verify Bills and Invoices

Once you receive any bills or invoices from anyone, even from a trusted source, get them verified if they are real. Before you make the payment, because the outstanding is from a trusted source, you must keep in mind that even government units can be duplicated, and fake representatives are roaming around as free spirits.

Hence, it is always wise to verify the invoices you receive before you go ahead and make any payments. If the bill you received came by email, make sure to check if the sender is known or from an authorised source. The same should be done if it was sent to the postal address.

2. Do an Employee Background Check

This is very important for every LLC that has employees. Before you hire anyone, make sure to do a proper background check. If the person is experienced, check with their previous employers about them. The following points can be checked before hiring anyone,

• If they have previous job experience, then look for the reason for them to leave the company
• Check their behaviour with the co-workers
• Find out if they have any criminal offences or similar accusations in the past
• If they were ever associated with any illegal activities or embezzlement
• If the hired person is a newbie, check with their college and maybe dig a bit into their life outside of the office.

A complete background check for any employee is a must for your LLC. For a small LLC, it may sound expensive to do a thorough checkup. In that case, they can outsource the entire hiring process.

3. Train Employees to Handle Scams

The next step would be to train your employees on handling such scams. They should be aware of what to do and what not to do to protect the LLC. For example, all employees should be aware not to share passwords and OTPs via email. Besides, employees should be well aware of how to handle scams and scammers.

A comprehensive training schedule employers should start within the company to make employees aware of what types of scams they can face. They should also know about the measures to take if the scam happens. They must be prepared with these trainings and act immediately when required.

4. Secure Office Computers and Other Devices

Any device, whether it is a computer or a mobile phone, that is used to access office files should be protected with a proper firewall. Office computers or the machines provided to the remote employees should restrict use. For example, office computers can put a barrier to malicious sites.

Restricting such websites on office computers helps protect the files and documents of the LLC. Employees often download software from third-party websites, which are not secure to use. These websites or ads pop up on the homepage of the site may harm your office computer if you click any one of the links by mistake. Besides, anti-virus or any similar software should be installed in the computers and in the same way, the mobile phones and tablets should be maintained.

5. Know Your Customers and Vendors

People you are working with should also be checked and verified before you work with them. When you get vendors, it is important to check their background and line of work. A lot of scammers hide behind small vendors and suppliers. They associate with small and medium businesses just to attempt a scam.

Before you sign with a vendor, make sure to check if they are trustworthy. Try to get a review of them or, if possible, other customers’ feedback on their work. Make sure you get them from a reliable source. Once you are double sure, then only work with them. This applies to your customers as well. Before you sign any contract with them, check and verify them first. Check their websites and if they have a real office,

6. Get Insurance

Once you start an LLC, immediately get insurance for damages due to theft, hack, or any other scams. As a result, if there is any damage, insurance may cover that for you. As an LLC, you must get general insurance to protect your business. If your business has employees, then employee protection insurance must be there.

For specific damages like tax ID theft or digital scams, LLCs can get insurance for both types of damage. If the coverage allows, you may get a large part of the damage cost reimbursed. Though it sounds like a good deal to get insurance for such damages, not all types of damage insurance offer full or large coverage. It is recommended to read their conditions carefully before buying it, especially the coverage.

Other Security Measures to Protect Your LLC

Apart from the above-mentioned 6 measures, there can be some more that can help you protect your LLC from scammers. The following are the points to note when it comes to LLC protection,

• Be Careful with Emails and SMSs

Whenever you receive an email from a colleague or co-worker, addressing you and asking for money, immediately check the sender’s email address. If it is a legit one, then verify with the sender if they really need money from you. You can do the same thing if you receive an SMS from an unknown number but a known name.

• Handle Problems with Patience

Sometimes scammers play with your anxiety level to snatch money. They send you an email or call you over the phone to make you worry about things like electricity disruption, credit card cancellation, gas line cut-off, and so on. In such cases, we often get paranoid and try to solve it as soon as possible by sending the money (especially if a wire transfer is available). But it is not a wise thing to do. The first thing we should be careful about is not to get worried or anxious over a random call or an email that can be fake.

We must handle the situation calmly and with patience. Once you get such information, contact the authorised organisation, like the electricity office, the gas station or your bank. Do not rush to make the payment.

• Use Key-Card for Safe Entry

Make your office entry safe by introducing a key card for all workers. This will prevent trespassers from entering the office premises at any time. If an unknown or third person is visiting, they must go through the identity proof process before entering the office.

• Get a Professional to Monitor

Finally, get a tech-savvy person who can monitor all the day-to-day activities within the company as well as with the clients and vendors. Any suspicious email or conversation and it will be taken care of before it is too late. LLCs can appoint an in-house expert or can outsource the service.

In Conclusion

LLCs are getting scammed left and right today. The reason is that with the advancement of technology, crime and criminals become smarter. When we are confident that we have all types of security measures to protect our company, scammers come up with a whole new concept. We may not protect our business for a long time, but we can definitely take extra care to seal any gaps that can harm the company.

This article is based on deep research and experience that LLCBuddy editors have gained after spending so many years in the business world. These scam-prevention tips work like magic if they are taken on time. Besides, you can and should always take help from experts like attorneys and cybercrime officials if something major happens in the company.