Running a small business requires dedication and long hours to ensure profitability and maintain positive relationships. However, fraudsters can undermine these efforts by impersonating a brand and tricking its stakeholders. Knowing the signs of brand impersonation and how to respond is key to protecting the business and its customers.
Understanding Brand Impersonation
Brand impersonation occurs when scammers pose as legitimate companies to deceive customers or vendors. Data from the Federal Trade Commission (FTC) recorded over 330,000 reports of business impersonation in 2023.
Fraudsters’ motivations can vary. For example, they can conduct phishing scams—the most frequently reported type of cybercrime—in which they impersonate a brand to collect customer data. The scammer could also use a brand’s logo and name to open new accounts or apply for loans they don’t intend to repay. They could also use the brand name to copy and profit from a company’s products or services.
Regardless of the method, impersonation is a form of dishonesty that can harm a business, its employees, customers, and business partners.
The Consequences of Brand Impersonation
Brand impersonation can significantly damage multiple aspects of running a business.
Decreased Customer Trust
One of the biggest consequences of brand impersonation is the loss of customer trust. When scammers misuse a business’s identity, even loyal customers may question a brand’s reliability and their own safety. This erosion of confidence can affect sales and damage long-term relationships.
Revenue Loss
In many cases, brand impersonation diverts revenue from legitimate businesses. Instead of supporting the actual brand, some customers may pay scammers for counterfeit or nonexistent products or services.
Damaged Brand Reputation
Scams linked to a reputable business name can spread quickly online. The negative association can harm a genuine company’s reputation for months or years, affecting multiple aspects of the business and making it difficult to regain credibility.
Increased Costs
Responding to brand impersonation cases can incur significant costs, including legal fees, cybersecurity measures, customer support and media spending. These expenses can especially strain small businesses already operating with limited resources.
Warning Signs of Brand Impersonation
Being a victim of brand impersonation often shows up in the following familiar patterns.
Unusual Customer Complaints
A common warning sign is unusual customer complaints about services, products or interactions that the business never engaged in or offered. For example, a customer might complain about an order that never arrived, while the company has no record of the transaction.
Unauthorized Online Accounts or Listings
Fraudsters can create fake business websites, social media profiles or directory listings. An online search can sometimes reveal these unauthorized accounts, which typically use the company’s branding to mislead consumers.
For example, a scammer might post a fake job listing under a real company’s name and ask job seekers for payment or personal documents to process the application.
Unexpected Invoices or Bills
Some scammers impersonate businesses when interacting with vendors or service providers, resulting in invoices for services or items the company never ordered. These fake transactions can cause confusion and damage trust between brands and vendors.
What Businesses Can Do When Someone Is Impersonating Them
If a business notices one or more warning signs of brand impersonation, it should take immediate action. These steps can help mitigate the damage and bring the scammers to justice.
Gather Evidence
The first step is to document the impersonation, collect evidence and build a case. Evidence could include screenshots, customer messages, emails, invoices and other records of fraudulent activity. A strong evidence file makes it easier to report the issue to the authorities.
Report to the Authorities
The affected business should report the impersonation to local law enforcement, the Federal Trade Commission, or other relevant consumer protection agencies. If the scam involves online accounts or e-commerce listings, brands should also report directly to the platforms hosting them.
Inform Affected Parties
Prompt communication helps minimize harm. The business should immediately notify customers, vendors, or job seekers who may have been affected by fake listings or communications. Clear and timely statements show the brand’s accountability and concern for customers and relevant stakeholders.
Take Legal Action
If the impersonation caused significant harm, the business can take legal action. A business attorney can help brands send cease-and-desist letters or file trademark lawsuits to stop scammers from harming the company and its customers.
How to Proactively Prevent Brand Impersonation
A business can guard itself against brand impersonation in multiple ways.
Register Trademarks
Trademarking a business name or logo provides a company with a stronger legal foundation when dealing with impersonators. A registered trademark makes it easier to pursue legal action against scammers or other parties attempting to use the brand outside its allowed context.
Monitor Brand Mentions
Consistent monitoring of online mentions, reviews and social media activity can help businesses quickly identify impersonation attempts. Free tools like Google Alerts can help provide early warnings of potential fraudulent activity.
Educate Employees and Customers
The human element contributes to 68% of data breaches worldwide, making education essential to minimizing damage. Employees and customers are often the first to notice or interact with unusual activities.
Businesses should train staff to recognize and report suspicious activity. It should also inform customers about typical company communication and red flags they should look out for. For example, a business can clarify that it never requests passcodes over email or phone.
Build a Strong Defense
Brand impersonation is a significant threat to small businesses. When scammers get away with exploiting a company’s name, the business usually has to deal with the fallout. Understanding how these scams operate and taking proactive steps to protect themselves can help enterprises defend themselves and their customers, vendors, and employees.
Devin Partida is the Editor-in-Chief of ReHack.com, and is especially interested in writing about business and BizTech. Devin’s work has been featured on Entrepreneur, Forbes, and Nasdaq.
Photo courtesy Pixabay
