Why Fraud Protection and Cybersecurity Are Critical for Small Businesses

a year ago   •   3 min read

By Satta Hightower

Data breaches at multibillion-dollar corporations and well-known brands often receive the most attention, but small businesses aren't immune to cyberattacks. In 2020 alone, small businesses experienced 407 security breaches, according to Verizon's Data Breach Investigations Report. Each attack costs small businesses about $200,000, business insurance firm Hiscox notes. Small businesses are collecting and storing more customer and operational data, and that's made fraud protection and cybersecurity essential. Even the smallest measures can protect your data and prevent a breach—saving you and your business time and money.

A growing consideration for small businesses.

Your business probably relies on various technologies—a staff scheduling platform, an integrated point-of-sale system, inventory management software, or maybe a third-party delivery app or order management tool. Your employees might access business data on-site using your workplace computer system or at home on their personal laptops, smartphones, and tablets. More devices and systems means more opportunities for hackers, especially if an employee doesn't have a strong password, if their device gets lost or stolen, or if your technology providers don't have strong security measures in place.

Phishing attacks spiked during the COVID-19 pandemic, Security magazine reports, with hackers sending employees messages that appeared to be authentic but contained malicious links that gave them unauthorized access to critical business systems. And hackers are now using artificial intelligence to automate attacks and create threats designed to mimic human behavior and trick people into revealing personal data.

Why strong data protection is essential.

Small businesses don't have the billions of dollars that large corporations have to invest in security. Sometimes, small businesses aren't even the primary target; hackers use them as a gateway into a larger company's systems. For example, if a restaurant is on the ground floor of a large chain hotel and shares data or a network connection with it, a cybercriminal might consider it a prime target.

Attacks aren't limited to one sector, either. There were 125 security incidents in the hospitality sector in 2020, Verizon reports, and malicious software, web applications, and point-of-sale-related attacks were behind 61% of the breaches. And the hackers got away with payment, personal, and credential-related data—meaning they now have customers' credit card or debit card information, their personally identifiable information (such as their address, name, and phone number), and their password and login information.

A data breach can do significant financial damage, especially if you have to upgrade your systems or if you're responsible for any reparations. But the damage a breach can do to your reputation is just as severe. Customers expect you to protect their data. A preventable data breach violates their trust—and makes them less willing to share their information and their money with your business.

How your small business can build better data security.

Despite the growing threat of bad actors and data theft, many small businesses have been able to successfully protect their networks from intrusion. Regardless of whether your small businesses has the resources to mount an impenetrable cybersecurity defense, there are steps you can take to safeguard your customer and business data.

Train and educate your employees.

The cause of most data breaches? Human error, IBM reports. Training your employees is the first and most cost-effective step you can take, according to the United States Small Business Administration.

If you send regular communications to your staff, include some cybersecurity tips in each one. Encourage them to change their passwords every couple of months. Teach them how to create strong passwords or use a random password generator and secure password vault. Offer guidance for optimizing the security settings on their personal devices.

If you can't afford to invest in cybersecurity training, the National Institute of Standards and Technology offers free and low-cost online training options. There might also be a local organization that offers cybersecurity resources, so check with your local or state department of commerce or economic development office to see what's available.

Invest in cybersecurity.

Antivirus software and firewall protection can reduce your security risk and provide fraud protection. Antivirus software detects potential threats, and firewall tools prevent cybercriminals from accessing your devices, systems, and network.

Multifactor authentication can be a cost-effective way to strengthen your cybersecurity. It requires employees first to enter their password and then a code sent to them via email or text. This double layer of protection makes it that much more difficult for hackers to access your or your customers' data.

And make sure to routinely back up your data—or, at the very least, work with a cloud provider that can automate this process for you. If you're using a cloud-based point-of-sale system, it should already have these capabilities. If you're not, you can use an external hard drive or a cloud service to ensure your data is routinely backed up.

Small businesses in every sector must be more mindful about cybersecurity. By investing in education and a few tools, you can take preventive measures to prevent fraud and secure your customer and business data. Customers are counting on you to do more than provide excellent service—they're counting on you to safeguard their data, too. Meeting their expectations on both fronts can strengthen your customer relationships, enhance your business's reputation, and boost your bottom line.

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