More than half of Australian small business owners are concerned their business will be scammed, yet a quarter do not have processes in place to prevent the latest wave of scams hitting our shores, according to new research.

The Westpac State of SME Scams Report found small businesses are paying a hefty price to scammers – on average losing $38,845 and recovering less than half of lost funds (44 per cent).

Despite the financial implications, two thirds of Australian small business owners are not training staff in scam awareness and prevention with three in five believing they don’t need to invest more into staff development to prevent scams.

Westpac general manager of SME Banking Ganesh Chandrasekkar encourages small businesses to think about their people as the most effective defence against scams.

“While most small businesses are confident they can identify scams, many of the latest scams we’re seeing, like business email compromise scams and remote access scams, are so well disguised it takes a lot of expertise to recognise and safely avoid them,” Mr Chandrasekkar said.

“The research reveals scams are not only money wasters, they are time wasters too. On average, it takes small businesses 33 days to rectify a scam and 42 per cent of business owners said they lost valuable time that should have been spent in their day-to-day operations.

“With increasingly sophisticated methods being used to target small businesses, causing financial and reputational hardship, it is important business owners strengthen their defences.

“A good start is putting more resources into education and training to increase awareness among staff.”

The findings show the most frequent forms of scams encountered by small businesses are phishing followed by false billing and invoice, and domain name renewal scams. It is those relating to false billing and invoicing which are the most effective, impacting one third of small businesses today.

‘Scam shame’ is a common emotional side effect, distressing two thirds of small business owners who have been scammed. Two in five small business employees were also worried they would lose their job when they realised their business had been impacted.

The results show a third of small businesses also faced brand and cultural repercussions, with 15 per cent reporting their clients were negatively impacted by scams.

Westpac’s scam protection TIPS:

• Be on the lookout and educate your staff about scams targeting businesses. Always verbally validate any payment requests or account changes that are delivered via email. Regardless if the sender claims to be from a supplier or appears to be someone in your company, call them on a trusted number to verbally confirm first.

• Be suspicious and refrain from clicking on links/pop-ups, opening attachments or downloading software if you are unsure of the source.

• Ensure you have adequate and current anti-virus security software and make sure the level of protection suits the needs of your business.

• Use strong passwords. Unique and strong passwords should be used for each system and changed regularly. Implementing a multi-factor authentication where available will add another layer of protection.

• Keep data safe by implementing a regular backup procedure. Setting user PC permissions and encrypting your databases will also help.

• Beware of impersonators posing as well-known organisations (such as ASIC, the ATO, energy companies or utility companies) to entice you into fulfilling their requests.

• Register for Stay Smart Online Alert Service or Scamwatch Radar alerts. These are free Government initiatives that alert of new online threats as they are identified.

• Review your bank accounts and payee list regularly and call your bank immediately if you detect anything unusual.