The $131 Billion Cybercrime Problem That’s Draining Small Businesses

New survey data shows nearly two-thirds of small companies were victims to online criminals last year.

BY BRUCE CRUMLEY @BRUCEC_INC

Illustration: Getty Images

When a big healthcare company, financial organization, retailer, or social media platform falls prey to cybercrime, it generates headlines for days on end. By contrast, small businesses targeted by digital thieves mostly suffer in anonymity, despite a whopping two-thirds of U.S. entrepreneurs reporting they’ve been victims of online fraud.

Widespread assumptions that cybercriminals only bother targeting the huge data reserves and deep finances of big companies was quantitatively debunked in new research released Feb. 24 by the independent research and education organization, Public Private Strategies Institute (PPSI). Its survey, conducted by Morning Consult, polled 506 U.S. small business owners about cybercrime. It found a stunning 72 percent said they “were hit by fraud, scams, or ransomware last year” alone. The estimated cost of those online attacks amounted to a staggering $131 billion.

The frequency, regularity, and scope of those cybercrimes now amount to what PPSI termed a “hidden tax” on small company victims. In addition to the initial funds that are stolen, diverted, or scammed, PPSI said the attacks also result in “draining revenue, slowing growth, and forcing entrepreneurs to divert time and resources away from serving customers and expanding their businesses.”

The survey results also showed becoming a target of cybercrime is now the rule rather than the exception among smaller employers, and an increasingly serious drain on those companies.

An Inc.com Featured Presentation

“When nearly three in four small businesses experience fraud or ransomware in a single year, this is no longer an isolated risk… (it) has become a routine cost of doing business,” said Tammy Halevy, executive director of PPSI’s Reimagine Main Street advocacy project. “At that scale, fraud functions like a hidden tax on entrepreneurship. That’s money that should be going toward hiring, innovation, and growth, not to criminals.”

Just as bad, 71 percent of respondents said they believe the spread of artificial intelligence tools will cause fraud and ransomware attacks to become more common in coming months and years. Nearly 30 percent of participants also expect attempted online crime to become considerably more frequent.

About 63 percent of entrepreneurs said they already consider current rates, costs, and consequences of those strikes “a serious problem.”

© Inc.com