Four in five are more worried than ever before
- Impacted businesses have lost $7,800 on average in the past year
- Email phishing, text and phone call scams are the most common types of fraud attempts
- Businesses are most likely to fall victim to fraudulent payments and chargebacks
- 90% of business owners worry AI will make fraud harder to detect
Toronto, September 24, 2024 – More and more Canadian small businesses are being hit by fraud, with half (50%) of them experiencing either attempted or successful fraud in the past 12 months, and more than one-third (36%) of those who fell victim to fraud suffering financial losses, according to new data by the Canadian Federation of Independent Business (CFIB) released in collaboration with Interac Corp. (Interac).
Impacted business owners have lost $7,800 on average in the past year. Beyond financial losses, small businesses dealt with lost time (76%), negative emotional impact (51%), and decreased staff morale (23%).
“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. 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,” said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB.
The bigger the business, the likelier it is to experience fraud attempts. The most common types of fraud attempts include email scams and phishing (85%), text (77%) and phone call scams (76%). Though less common, fraudulent payments and chargebacks (when a customer falsely disputes legitimate transactions) are more likely to result in business losses, for 19% and 16% of businesses respectively. Businesses in the hospitality, retail, transportation, personal services, and 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 payments with a bank or Amazon. It’s unbelievable how many of these I receive—several times a day on some days”
- Retail Business Owner, AB
Nine in ten (90%) business owners are also worried that the rise in the use of artificial intelligence (AI) will make fraud more sophisticated and harder to detect.
“This research drives home how important it is for the ecosystem to prioritize fraud prevention and detection. 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,” added Joanna Schoneveld, Fraud Management Leader at Interac.
Governments have a role to play in helping small businesses protect themselves from fraud and scams. CFIB’s recommendations to governments include:
- Enhancing the Code of Conduct for the Payment Card Industry in Canada ensuring accountability to merchants through a fair, transparent and competitive payment landscape in Canada. This includes implementing improvements to complaint handling processes for merchants, such as the process of challenging chargebacks.
- Making sure resources are allocated adequately to “cyber policing” and reporting yearly outcomes with specific numbers for small businesses.
- Providing small businesses with financial assistance (such as tax credits, low-interest loans or grants) to help them invest in IT security.
- Proactively sharing information on existing resources and best practices with businesses and associations.
- Providing advice specifically tailored to small and medium-sized enterprises (SME) on preventing cyberattacks.
Business owners’ fraud prevention practices
To combat fraud, half of businesses have implemented stricter verification processes for payments, such as multi-factor authentication for online transactions, while nearly four in ten (36%) increased cybersecurity investments and one-third (32%) enhanced employee training.
“Fraud is here to stay, and unfortunately, the rise in various AI tools is only exacerbating the issue. While October marks Cybersecurity Awareness Month in Canada, it’s important to stay vigilant year-round,” Pohlmann concluded.
Business owners can reach out to CFIB’s Business Advisors or visit Interac.ca for tips and best practices on how to protect their business and payments. To report fraud, businesses can contact the Canadian Anti-Fraud Centre, the RCMP or their local police department.
For media enquiries or interviews, please contact:
Dariya Baiguzhiyeva, CFIB
647-464-2814
Methodology
Final results for the Your Voice – August 2024 survey, conducted online from August 8-21, 2024, number of respondents = 2,340. For comparison purposes, a probability sample with the same number of respondents would have a margin of error of at most +/- 2.0%, 19 times out of 20.
About Interac Corp.
Interac empowers Canadians to transact digitally with confidence by providing payment and value exchange services. In helping to develop the future of money and data in Canada, security is the core of everything we do. We help keep Canadian customers safe and secure when transacting. With nearly 300 financial institutions connected to our network, Canadians choose Interac products over 20 million times a day on average to exchange money. Interac champions workplace culture, community, and corporate citizenship. We are proud to be one of Canada’s leading and most trusted financial brands. For more information, visit interac.ca
Interac is a trademark of Interac Corp.
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.
