Fighting Identity Theft With The Red Flags Rule

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An estimated nine million Americans have their identities stolen each year. Identity thieves may drain accounts, damage credit, and even put medical treatment at risk. The cost to business — left with unpaid bills racked up by scam artists — can be staggering, too.

The Red Flags Rule1 requires many businesses and organizations to implement a written identity theft prevention program designed to detect the “red flags” of identity theft in their day-to-day operations, take steps to prevent the crime, and mitigate its damage. The bottom line is that a program can help businesses spot suspicious patterns and prevent the costly consequences of identity theft.

The Federal Trade Commission (FTC) enforces the Red Flags Rule with several other agencies. This article has tips for organizations under FTC jurisdiction to determine whether they need to design an identity theft prevention program.

An Overview

The Red Flags Rule tells you how to develop, implement, and administer an identity theft prevention program. A program must include four basic elements that create a framework to deal with the threat of identity theft.2

  1. A program must include reasonable policies and procedures to identify the red flags of identity theft that may occur in your day-to-day operations. Red Flags are suspicious patterns or practices, or specific activities that indicate the possibility of identity theft.3 For example, if a customer has to provide some form of identification to open an account with your company, an ID that doesn’t look genuine is a “red flag” for your business.
  2. A program must be designed to detect the red flags you’ve identified. If you have identified fake IDs as a red flag, for example, you must have procedures to detect possible fake, forged, or altered identification.
  3. A program must spell out appropriate actions you’ll take take when you detect red flags.
  4. A program must detail how you’ll keep it current to reflect new threats.

Just getting something down on paper won’t reduce the risk of identity theft. That’s why the Red Flags Rule has requirements on how to incorporate your program into the daily operations of your business. Fortunately, the Rule also gives you the flexibility to design a program appropriate for your company — its size and potential risks of identity theft. While some businesses and organizations may need a comprehensive program to address a high risk of identity theft, a streamlined program may be appropriate for businesses facing a low risk.

Securing the data you collect and maintain about customers is important in reducing identity theft. The Red Flags Rule seeks to prevent identity theft, too, by ensuring that your business or organization is on the lookout for the signs that a crook is using someone else’s information, typically to get products or services from you without paying for them.

That’s why it’s important to use a one-two punch in the battle against identity theft: implement data security practices that make it harder for crooks to get access to the personal information they use to open or access accounts, and pay attention to the red flags that suggest that fraud may be afoot.

Who Must Comply with the Red Flags Rule: A Two-Part Analysis

The Red Flags Rule requires “financial institutions” and some “creditors” to conduct a periodic risk assessment to determine if they have “covered accounts.” The determination isn’t based on the industry or sector, but rather on whether a business’ activities fall within the relevant definitions. A business must implement a written program only if it has covered accounts.

Financial Institution

The Red Flags Rule defines a “financial institution” as a state or national bank, a state or federal savings and loan association, a mutual savings bank, a state or federal credit union, or a person that, directly or indirectly, holds a transaction account belonging to a consumer.4 While many financial institutions are under the jurisdiction of the federal bank regulatory agencies or other federal agencies, state-chartered credit unions are one category of financial institution under the FTC’s jurisdiction.

Creditor

The Red Flags Rule defines “creditor” based on conduct.5

To determine if your business is a creditor under the Red Flags Rule, ask these questions:

Does my business or organization regularly:

  • defer payment for goods and services or bill customers?
  • grant or arrange credit?
  • participate in the decision to extend, renew, or set the terms of credit?

If you answer:

  • No to all, the Rule does not apply.
  • Yes to one or more, ask:

Does my business or organization regularly and in the ordinary course of business:

  • get or use consumer reports in connection with a credit transaction?
  • give information to credit reporting companies in connection with a credit transaction?
  • advance funds to — or for — someone who must repay them, either with funds or pledged property (excluding incidental expenses in connection with the services you provide to them)?

If you answer:

  • No to all, the Rule does not apply.
  • Yes to one or more, you are a creditor covered by the Rule.

Covered Accounts

If you conclude that your business or organization is a financial institution or a creditor covered by the Rule, you must determine if you have any “covered accounts,” as the Red Flags Rule defines that term. You’ll need to look at existing accounts and new ones6.  Two categories of accounts are covered:

  1. A consumer account for your customers for personal, family, or household purposes that involves or allows multiple payments or transactions.7 Examples are credit card accounts, mortgage loans, automobile loans, checking accounts, and savings accounts.
  2.  “Any other account that a financial institution or creditor offers or maintains for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the financial institution or creditor from identity theft, including financial, operational, compliance, reputation, or litigation risks.”8 Examples include small business accounts, sole proprietorship accounts, or single transaction consumer accounts that may be vulnerable to identity theft. Unlike consumer accounts designed to allow multiple payments or transactions — always considered “covered accounts” under the Rule — other types of accounts are “covered” only if the risk of identity theft is reasonably foreseeable.

In determining if accounts are covered under the second category, consider how they’re opened and accessed. For example, there may be a reasonably foreseeable risk of identity theft in connection with business accounts that can be accessed remotely — say, through the Internet or the telephone. Your risk analysis must consider any actual incidents of identity theft involving accounts like these.

If you don’t have any covered accounts, you don’t need a written program. But business models and services change. You may acquire covered accounts through changes to your business structure, process, or organization. That’s why it’s good policy and practice to conduct a periodic risk assessment.

FAQs

  1. I review credit reports to screen job applicants. Does the Rule apply to my business on this basis alone? No, the Rule does not apply because the use is not “in connection with a credit transaction.”
  2. What if I occasionally get credit reports in connection with credit transactions?According to the Rule, these activities must be done “regularly and in the ordinary course of business.” Isolated conduct does not trigger application of the Rule, but if your business regularly furnishes delinquent account information to a consumer reporting company but no other credit information, that satisfies the “regularly and in the ordinary course of business” prerequisite.What is deemed “regularly and in the ordinary course of business” is specific to individual companies. If you get consumer reports or furnish information to a consumer reporting company regularly and in the ordinary course of your particular business, the Rule applies, even if for others in your industry it isn’t a regular practice or part of the ordinary course of business.
  3. I am a professional who bills my clients for services at the end of the month. Am I a creditor just because I allow clients to pay later?No. Deferring payment for goods or services, payment of debt, or the purchase of property or services alone doesn’t constitute “advancing funds” under the Rule.
  4. In my business, I lend money to customers for their purchases. The loans are backed by title to their car. Is this considered “advancing funds”?Yes. Anyone who lends money — like a payday lender or automobile title lender — is covered by the Rule. Their lending activities may make their business attractive targets for identity theft. But deferring the payment of debt or the purchase of property or services alone doesn’t constitute “advancing funds.”
  5. I offer instant credit to my customers and contract with another company to pull credit reports to determine their creditworthiness. No one in our organization ever sees the credit reports. Is my business covered by the Rule?Yes. Your business is — regularly and in the ordinary course of business — using credit reports in connection with a credit transaction. The Rule applies whether your business uses the reports directly or whether a third-party evaluates them for you.
  6. I operate a finance company that helps people buy furniture. Does the Rule apply to my business?Yes. Your company’s financing agreements are considered to be “advancing funds on behalf of a person.”
  7. In my legal practice, I often make copies and pay filing, court, or expert fees for my clients. Am I “advancing funds”?No. This is not the same as a commercial lender making a loan; “advancing funds” does not include paying in advance for fees, materials, or services that are incidental to providing another service that someone requested.
  8. Our company is a “creditor” under the Rule and we have credit and non-credit accounts. Do we have to determine if both types of accounts are “covered accounts”? Yes. You must examine all your accounts to determine which are “covered accounts” that must be included in your written identity theft prevention program.
  9. My business accepts credit cards for payments. Are we covered by the Red Flags Rule on this basis alone?No. Just accepting credit cards as a form of payment does not make you a “creditor” under the Red Flags Rule.
  10. My business isn’t subject to much of a risk that a crook is going to misuse someone’s identity to steal from me, but it does have covered accounts. How should I structure my program?If identity theft isn’t a big risk in your business, complying with the Rule is simple and straightforward. For example, if the risk of identity theft is low, your program might focus on how to respond if you are notified — say, by a customer or a law enforcement officer — that someone’s identity was misused at your business. The Guidelines to the Rule have examples of possible responses. But even a business at low risk needs a written program that is approved either by its board of directors or an appropriate senior employee.

How To Comply: A Four-Step Process

Many companies already have plans and policies to combat identity theft and related fraud. If that’s the case for your business, you’re already on your way to full compliance.

1. Identify Relevant Red Flags

What are “red flags”? They’re the potential patterns, practices, or specific activities indicating the possibility of identity theft.9 Consider:

Risk Factors. Different types of accounts pose different kinds of risk. For example, red flags for deposit accounts may differ from red flags for credit accounts, and those for consumer accounts may differ from those for business accounts. When you are identifying key red flags, think about the types of accounts you offer or maintain; the ways you open covered accounts; how you provide access to those accounts; and what you know about identity theft in your business.

Sources of Red Flags. Consider other sources of information, including the experience of other members of your industry. Technology and criminal techniques change constantly, so it’s important to keep up-to-date on new threats.

Categories of Common Red Flags. Supplement A to the Red Flags Rule lists specific categories of warning signs to consider including in your program. The examples here are one way to think about relevant red flags in the context of your own business.

  • Alerts, Notifications, and Warnings from a Credit Reporting Company. Changes in a credit report or a consumer’s credit activity might signal identity theft:
    • a fraud or active duty alert on a credit report
    • a notice of credit freeze in response to a request for a credit report
    • a notice of address discrepancy provided by a credit reporting company
    • a credit report indicating a pattern inconsistent with the person’s history B for example, an increase in the volume of inquiries or the use of credit, especially on new accounts; an unusual number of recently established credit relationships; or an account that was closed because of an abuse of account privileges
  • Suspicious Documents. Documents can offer hints of identity theft:
    • identification looks altered or forged
    • the person presenting the identification doesn’t look like the photo or match the physical description
    • information on the identification differs from what the person with identification is telling you or doesn’t match a signature card or recent check
    • an application looks like it’s been altered, forged, or torn up and reassembled
  • Personal Identifying Information. Personal identifying information can indicate identity theft:
    • inconsistencies with what you know — for example, an address that doesn’t match the credit report or the use of a Social Security number that’s listed on the Social Security Administration Death Master File
    • inconsistencies in the information a customer has submitted to you
    • an address, phone number, or other personal information already used on an account you know to be fraudulent
    • a bogus address, an address for a mail drop or prison, a phone number that’s invalid, or one that’s associated with a pager or answering service
    • a Social Security number used by someone else opening an account
    • an address or telephone number used by several people opening accounts
    • a person who omits required information on an application and doesn’t respond to notices that the application is incomplete
    • a person who can’t provide authenticating information beyond what’s generally available from a wallet or credit report — for example, someone who can’t answer a challenge question
  • Account Activity. How the account is being used can be a tip-off to identity theft:
    • shortly after you’re notified of a change of address, you’re asked for new or additional credit cards, or to add users to the account
    • a new account used in ways associated with fraud — for example, the customer doesn’t make the first payment, or makes only an initial payment; or most of the available credit is used for cash advances or for jewelry, electronics, or other merchandise easily convertible to cash
    • an account used outside of established patterns — for example, nonpayment when there’s no history of missed payments, a big increase in the use of available credit, or a major change in buying or spending patterns or electronic fund transfers
    • an account that is inactive is used again
    • mail sent to the customer that is returned repeatedly as undeliverable although transactions continue to be conducted on the account
    • information that the customer isn’t receiving an account statement by mail or email
    • information about unauthorized charges on the account
  • Notice from Other Sources. A customer, a victim of identity theft, a law enforcement authority, or someone else may be trying to tell you that an account has been opened or used fraudulently.

2. Detect Red Flags

Sometimes, using identity verification and authentication methods can help you detect red flags. Consider whether your procedures should differ if an identity verification or authentication is taking place in person, by telephone, mail, or online.

  • New accounts. When verifying the identity of the person who is opening a new account, reasonable procedures may include getting a name, address, and identification number and, for in-person verification, checking a current government-issued identification card, like a driver’s license or passport.
  • Depending on the circumstances, you may want to compare that to information you can find out from other sources, like a credit reporting company or data broker, or the Social Security Number Death Master File.10 Asking questions based on information from other sources can be a helpful way to verify someone’s identity.
  • Existing accounts. To detect red flags for existing accounts, your program may include reasonable procedures to confirm the identity of the person you’re dealing with, to monitor transactions, and to verify the validity of change-of-address requests. For online authentication, consider the Federal Financial Institutions Examination Council’s guidance on authentication as a starting point.11
  • It explores the application of multi-factor authentication techniques in high-risk environments, including using passwords, PINs, smart cards, tokens, and biometric identification. Certain types of personal information — like a Social Security number, date of birth, mother’s maiden name, or mailing address — are not reliable authenticators because they’re so easily accessible.

You may be using programs to monitor transactions, identify behavior that indicates the possibility of fraud and identity theft, or validate changes of address. If so, incorporate these tools into your program.

3. Prevent And Mitigate Identity Theft

When you spot a red flag, be prepared to respond appropriately. Your response will depend on the degree of risk posed. It may need to accommodate other legal obligations, like laws about providing and terminating service.

The Guidelines in the Red Flags Rule offer examples of some appropriate responses, including:

  • monitoring a covered account for evidence of identity theft
  • contacting the customer
  • changing passwords, security codes, or other ways to access a covered account
  • closing an existing account
  • reopening an account with a new account number
  • not opening a new account
  • not trying to collect on an account or not selling an account to a debt collector
  • notifying law enforcement
  • determining that no response is warranted under the particular circumstances

The facts of a particular case may warrant using one of these options, several of them, or another response altogether. Consider whether any aggravating factors raise the risk of identity theft. For example, a recent breach that resulted in unauthorized access to a customer’s account records would call for a stepped-up response because the risk of identity theft rises, too.

4. Update The Program

The Rule recognizes that new red flags emerge as technology changes or identity thieves change their tactics, and requires periodic updates to your program. Factor in your own experience with identity theft; changes in how identity thieves operate; new methods to detect, prevent, and mitigate identity theft; changes in the accounts you offer; and changes in your business, like mergers, acquisitions, alliances, joint ventures, and arrangements with service providers.

Administering Your Program

Your Board of Directors — or an appropriate committee of the Board — must approve your initial plan.  If you don’t have a board, someone in senior management must approve it.  The Board may oversee, develop, implement, and administer the program — or it may designate a senior employee to do the job. Responsibilities include assigning specific responsibility for the program’s implementation, reviewing staff reports about compliance with the Rule, and approving important changes to your program.

The Rule requires that you train relevant staff only as “necessary.” Staff who have taken fraud prevention training may not need to be re-trained. Remember that employees at many levels of your organization can play a key role in identity theft deterrence and detection.

In administering your program, monitor the activities of your service providers. If they’re conducting activities covered by the Rule — for example, opening or managing accounts, billing customers, providing customer service, or collecting debts — they must apply the same standards you would if you were performing the tasks yourself. One way to make sure your service providers are taking reasonable steps is to add a provision to your contracts that they have procedures in place to detect red flags and either report them to you or respond appropriately to prevent or mitigate the crime. Other ways to monitor your service providers include giving them a copy of your program, reviewing the red flag policies, or requiring periodic reports about red flags they have detected and their response.

It’s likely that service providers offer the same services to a number of client companies. As a result, the Guidelines are flexible about service providers using their own programs as long as they meet the requirements of the Rule.

The person responsible for your program should report at least annually to your Board of Directors or a designated senior manager. The report should evaluate how effective your program has been in addressing the risk of identity theft; how you’re monitoring the practices of your service providers; significant incidents of identity theft and your response; and recommendations for major changes to the program.12

Source: Fighting Identity Theft with the Red Flags Rule: A How-To Guide for Business | Federal Trade Commission

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With Fraud Growing, Robinhood Becomes Latest Fintech To Block Customers From Transferring Money From Certain Banks

Fraud is a growing issue for fintech companies, as bad actors are doing everything from stealing identities to exploiting the slow U.S. bank-to-bank transfer network to siphon off money. The problem has gotten so bad that some fintechs, including investment service Betterment and digital banks HMBradley and One, have temporarily banned transfers from other digital banks for fear of being on the hook for a fraudulent transaction.

Forbes has learned that Robinhood, the dominant free stock trading app with 22 million active users, has become the latest fintech to ban transfers from a specific list of institutions as a blunt tool for fighting fraud. In a statement to Forbes, a spokesperson confirmed: “Robinhood prevents transfers from routing numbers that display a high pattern of return and fraud rates.” (Routing numbers are the bank identification numbers used by the bank-to-bank transfer system in America.)

“It is a standard practice to prevent transfers from institutions that are sources of sustained levels of fraudulent activity, whether digital banks or traditional banks,” the statement continues. “When Robinhood and other financial institutions take the step to prevent transfers from a particular routing number, it’s because the fraud problem originates at that institution.”

Robinhood declined to disclose the specific institutions on the list, but Forbes has learned that it contains a wide variety of banks, including a heavy concentration of neobanks and the moderate-sized banks they partner with, plus a small number of large, traditional brick-and-mortar institutions. Some of the names on the list include:

LendingClub; Ohio-based Sutton Bank (one of the partner banks that Square’s Cash App uses to store customer deposits); Tennessee-based First Century Bank (one of the partner banks for PayPal’s Cash Card); prepaid card issuer and digital bank Green Dot; New York-based Metropolitan Commercial Bank (the partner bank for digital bank Current); and Iowa-based Lincoln Savings Bank (one of the partner banks for fintech apps such as Cash App and Acorns). Pittsburgh-based PNC Bank–the nation’s seventh largest bank by assets–and its recent acquisition BBVA USA are also on Robinhood’s banned list, Forbes has been told.

LendingClub, First Century Bank, Green Dot and Metropolitan Commercial Bank didn’t respond to Forbes’ requests for comment. A Sutton Bank spokesperson says, “the fraud rates we experience across our programs are in line with or below industry averages” and that ACH returns (when a transaction fails because the customer doesn’t have enough funds in his or her account) are more likely the culprit. PayPal says it has never had an integration with Robinhood. Lincoln Savings Bank says it has no knowledge of such a ban, and that it hasn’t heard any complaints from customers. PNC also says it found no evidence of Robinhood’s ban.

The slow speed of America’s bank-to-bank transfer network makes certain types of fraud possible. Since transactions can take days to settle, people can move money from one account to another and then withdraw the same funds from both accounts while a transfer is in process–that’s why some fintechs are afraid to accept transfers.

Many financial institutions have lists of banks whose customer deposits they view as higher risk, and they apply extra scrutiny to transactions with those institutions. But outright bans on transfers are unusual and reflect the difficulty some fintechs have had controlling fraud.

Robinhood’s ban comes as it grapples with a variety of troubling security issues. In early November, the brokerage disclosed a breach that exposed personal data of roughly seven million users to hackers that demanded an extortion payment from the company. (Robinhood wrote in a blog post that it “contained” the hack, and said there was “no financial loss to any customers” as a result of the incident.)

And this summer, Robinhood reported that its provision for credit losses for the first half of the year surged 54%, largely due to increased fraudulent activity. Tommy Nicholas first encountered Robinhood’s ban last month when he tried to move money from his personal digital bank account (he declined to say where) to Robinhood.

The brokerage app abruptly rejected it, even though he had been moving funds between the two institutions without issue for three years. This naturally piqued Nicholas’ interest, since he’s the cofounder and CEO of Alloy, a startup whose software helps fintechs to prevent fraud and to comply with “know-your-customer” regulations (aimed at controlling money laundering, tax evasion and other illicit activity).

“Banks and fintech companies are banning deposits and transfers from fintech companies at a rate I’ve never seen before,” Nicholas tweeted after the experience. A wide range of factors have contributed to the problem fintechs are now having controlling fraud. One is that startups aim to have a “frictionless” signup process, where it’s quick and easy to join, making them a tempting target for scammers.

Another is that fraud is on the rise everywhere—fraud attempts on merchants rose 140% in 2021 compared with 2019, according to LexisNexis. Nicholas thinks one of the biggest causes of digital banks’ outsized fraud problem is simply their young age. Since they’re new and fast-growing, they have a larger concentration of new customers. And at any financial institution, new customers have a higher propensity to commit fraud than long-standing ones.

In early December, Forbes reported on merchants like Avis and Holiday Inn rejecting digital bank cards over fraud concerns, but fintechs blocking each other presents a different and potentially bigger challenge. So far, the total amount of transfers being blocked by fintechs isn’t large, Nicholas says. And a Robinhood spokesperson says that only a “single-digit percentage” of its users have been affected by its fraud-prevention bans—which means up to 2 million customers could encounter the block.

Yet if the practice continues to spread, digital banks’ brands could well suffer, as consumers won’t want to rely on a banking service that isn’t accepted by other apps for money transfers. In a blog post describing the challenges for fintechs, Nicholas writes: “The calculation used to be customer acquisition cost vs. lifetime value vs. fraud risk. Now, your institution’s reputation at the network level determines what your users can and can’t do. It’s no longer in each institution’s control.”

If bans between digital banks become common and long-lasting, all the startups could suffer, Nicholas says. That, he warns, could tilt the playing field further in incumbents’ favor and discourage entrepreneurs from starting new neobanks. “Fewer fintech companies means less innovation and less competition, which negatively affects the consumer, especially those underbanked or niche populations who may want something that traditional banking institutions aren’t providing,” Nicholas writes.

For example, Chime has attracted millions of customers partly because people can use it like a regular bank. It has helped lower-income Americans avoid monthly and overdraft fees and has pushed the entire banking industry to reduce or remove fees, with Capital One being the latest established bank to eliminate overdraft fees.

If blanket bans aren’t the right approach, what is? Nicholas believes companies can do more to identify each specific type of fraud they see–there are many ever-changing varieties–and deploy custom tactics to combat each one, such as requiring users to submit more documentation or a valid phone number to complete a transaction.

He also thinks fintechs need to collaborate more: “We all win by lowering the fraud risk of the entire ecosystem, but the growth mindset of the last five to ten years has lacked the incentives for deep collaboration at almost all levels. There are efforts underway to correct some of this, but I think more needs to be done.”

12/20/21: Updated to include comment from PNC.

I lead our fintech coverage at Forbes and also cover crypto. I edit our annual Fintech 50 list and 30 Under 30 list for fintech, and I’ve written frequently about leadership and corporate diversity. Before Forbes, I worked for ten years in marketing consulting, in roles ranging from client consulting to talent management. I’m a graduate of Middlebury College and Columbia Journalism School. Have a tip, question or comment? Email me jkauflin@forbes.com or send tips securely here: https://www.forbes.com/tips/. Follow me on Twitter @jeffkauflin. Disclosure: I own some bitcoin and ether.

I’m a reporter on Forbes’ wealth team covering the world’s richest people and tracking their fortunes. I was previously an assistant editor for Forbes’ Money & Markets section, and I worked for Bloomberg and Pitchbook News before that. I studied history and economics at the University of Virginia, where I also wrote for the student paper and a very secretive underground satire magazine.

Source: With Fraud Growing, Robinhood Becomes Latest Fintech To Block Customers From Transferring Money From Certain Banks

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5 Last-Minute Ideas for a Successful Small Business Saturday

Small Business Saturday is an American shopping holiday that celebrates small businesses and it happens every year on the last Saturday of November. Founded in 2010 by American Express, Small Business Saturday is a great way to promote your small business because unlike other popular shopping days like Black Friday and Cyber Monday, you don’t have to compete with the big guys. 

So, it’s important that you take advantage of Small Business Saturday this year if you want to attract more shoppers to your business and generate more sales. But, how can you stand out on Small Business Saturday and grab the attention of shoppers?

Check out these 5 ideas for a successful Small Business Saturday. 

1. Put up signage

If you want to have a successful Small Business Saturday this year, first you need to remind your customers of the shopping holiday. So, be sure to put up signage in your small business weeks before the big day to inform shoppers and get them excited about the event. 

American Express even offers customizable free signage and marketing materials like decals and posters you can use to promote Small Business Saturday to your customers.  

If your business doesn’t have a physical location, you can “put up signage” on your website. Make sure to display your Small Business Saturday promotions prominently on your homepage and consider creating a dedicated landing page for Small Business Saturday deals. 

2. Create an email marketing campaign

Email is one of the best ways to stay in touch with your customers—and it’s one of the best ways to promote your Small Business Saturday deals too. With email marketing, you can send your subscribers an invitation to your Small Business Saturday event straight to their inboxes. In the email, tell customers how much they can expect to save, and use words that create urgency like “don’t wait,” “one day only” and “don’t miss it.”

3. Use social media and relevant hashtags

Your audience is on social media. In fact, according to Oberlo, 90.4 percent of Millenials, 77.5 percent of Generation X and 48.2 percent of Baby Boomers are active social media users. So, if you want to have a successful Small Business Saturday you need to be on social media too.

Start creating and sharing Small Business Saturday posts on social media platforms like Facebook, Twitter and Instagram. To widen your reach, be sure to use relevant hashtags like #SmallBusinessSaturday, #SmallBizSat, #ShopSmall and #ShopLocal. 

4. Run a giveaway

A great way to get shoppers excited about Small Business Saturday is by running a giveaway. Everyone loves winning a prize or getting a free gift so running a giveaway will give shoppers a little extra incentive to shop at your business on the last Saturday of November. 

Your business could hold an online giveaway where users have to share your post in order to enter. This will help get the word out about your Small Business Saturday promotions faster. You could also run a simple raffle at your business or give away a free gift to the first 25 people that make a purchase. A giveaway is a great way to stir up excitement and turn casual shoppers into lifelong fans of your business. 

5. Share the story of your business 

Lastly, because Small Business Saturday is all about supporting local, small businesses, you should share your story. Sharing the story of your business will help you make connections and build meaningful relationships with your customers. 

So, let your customers know how you started your business and why you started it. You can share your story via signage, social media posts, in your email newsletter and so on. Sharing your story will help your customers get to know the person behind the company and show them why they should support your business.  

Make Small Business Saturday your own

Get ready to have the most successful Small Business Saturday yet. With these tips, you can attract plenty of people that are interested in shopping at and supporting small businesses like yours. 

By: Syed Balkhi Entrepreneur Leadership Network VIP

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Black Businesses Receive Tech Industry Push Ahead Of Holiday Shopping Bonanza

The Covid-19 pandemic has dealt Black-owned businesses a tough hand. Stifled by stay-at-home orders, on-again off-again store closures and stricter limits occupancy limits, many businesses are struggling to outlast the seemingly unending virus outbreak.

Although they’ve rebounded slightly in recent months, Black-owned stores have experienced the greatest decline this year, plummeting from 1.1 million businesses in February to 640,000 in April—a 41% drop.

But spurred by a national movement to support Black businesses, which kicked off this summer, a new number of corporations are taking small steps to put the Black in Black Friday.

Black Friday online sales pulled in a record $7.4 billion in 2019— the second largest online shopping day ever and a 19.6% increase over the previous year—while the holiday season overall generated more than $72 billion in online sales, according to Adobe Analytics. Online sales for this Black Friday are projected to generate $10.3 billion.

The surge in digital spending over the holiday season and the heightened visibility that’s been awarded to small businesses through corporate sponsorships could have a considerable impact on Black businesses in particular, sustaining them through the a few more months of the pandemic.

Facebook, for one, launched its #BuyBlackFriday initiative and a corresponding toolkit and gift guide in October as part of a broader three-month campaign to buttress small businesses during the holiday season.

The gift guide features products from Black-owned businesses and was curated alongside the U.S. Black Chambers and several corporate partners. 

“Black-owned businesses have been hit especially hard by the pandemic, closing at twice the rate of other small businesses,” Facebook COO Sheryl Sandberg wrote in a blog post announcing the initiative. She added, “But we know that millions of people want to help.”

The campaign runs through Black Friday on November 27, a symbolic starting gun for the holiday shopping season.

More recently, Google partnered with Grammy-winning musician Wyclef Jean and the U.S. Black Chambers to promote its #BlackOwnedFriday campaign, an effort to make November 27 “Black-owned Friday” and galvanize shoppers to buy Black beyond the Thanksgiving weekend.

The tech giant has also showcased Black-owed businesses on its social platforms since mid-October and now allows users to find nearby stores that identify as Black-owned through its search engine.

“I’ve seen firsthand the strain and struggle that Black-owned businesses face,” Jean said in a statement. “For many of them, this holiday season will be critical to their survival.”

TikTok, the latest viral social media platform, threw its weight behind Black-owned businesses months after facing censorship allegations from Black creatives in June. Earlier this month, the video sharing platform, which has about 200 million monthly active users in the U.S., launched Support Black Businesses, a digital hub to amplify Black entrepreneurs. 

TikTok also announced #ShopBlack, an in-app campaign that allows users to create videos spotlighting their favorite Black-owned businesses or to share their experience as a Black entrepreneur.

As small businesses reel from the pandemic’s economic disruption, many big retailers have had breakaway growth. Amazon’s profits and sales exceeded analysts’ expectations, reporting a 37% sales growth and tripling its third-quarter profits as more shoppers turn to the e-commerce giant during the pandemic. 

But celebrities and influencers alike have started to leverage Amazon’s omnipresence to highlight Black sellers on the platform. Nearly 70% of the products on Oprah Winfrey’s highly anticipated annual list of her favorite things are created by Black-owned or Black-led businesses this year and all are available for purchase on Amazon.

This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at http://ted.com/tedx

The billionaire media mogul has partnered with Amazon on the list since 2015 and her yearly picks have provided brands with considerable gains in sales since the list’s 1996 advent.

Black Americans have developed a growing presence among small businesses owners and could stand to gain considerable sales from dedicated shopping holidays like Small Business Saturday, which raked in an estimated $19.6 billion in 2019. And while physical distancing measures will significantly curb foot traffic this year, more than 112 million Americans visited a small business on that day last year, a record high.

As shoppers increasingly reject winding lines that snake around the store, a trend that’s long been in the making but was exacerbated by the pandemic, they’re also looking to support independent local businesses—a potential boon for niche Black businesses with an online presence this holiday season. Follow me on Twitter. Send me a secure tip.

Ruth Umoh

 Ruth Umoh

I’m a reporter covering the various aspects of diversity and inclusion in business and society at large. Previously, I was a reporter at CNBC, where I focused on leadership and strategic management. I’ve also dabbled in video journalism, working as a breaking news digital producer for New York Daily News, followed by a yearlong stint as a producer at Rolling Stone. My work has been featured on New York Daily News, Yahoo Finance and Time Out. I’m a proud alumna of Columbia University Graduate School of Journalism, receiving honors for my investigative thesis on the alarming number of physicians dying by suicide. Tweet me @ruthumohnews or send tips to rumoh@forbes.com.

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MarketWatch

Black business ownership fell more than any demographic group since the beginning of the COVID-19 pandemic. We spoke to some across the nation who are still fighting to survive. See this video on MarketWatch: https://www.marketwatch.com/video/sec… MarketWatch provides the latest stock market, financial and business news. Get stock market quotes, personal finance advice, company news and more: https://www.marketwatch.com/ Follow MarketWatch on Facebook: https://www.facebook.com/marketwatch Follow MarketWatch on Twitter: https://twitter.com/MarketWatch Follow MarketWatch on Instagram: https://www.instagram.com/marketwatch/ Follow MarketWatch on LinkedIn: https://www.linkedin.com/company/mark…

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