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5 Deceptive Scams Small Businesses Should Be Aware Of

small business scams

Small to medium-sized businesses, churches, and nonprofit businesses have been hit hard by unscrupulous scammers perpetrating various scams. Some common schemes that affect small businesses are office supply scams, domain registration plots, fake check tricks, charity cons, and directory listing scams. Business Consumer Alliance urges businesses and their employees to be on the lookout for scams and offers some identifying warning signs that can help you avoid them.

Surprise Supplies

If you’re a business, you no doubt need supplies in order to provide your customers with the goods or services your company offers. Con artists use this as a way to scam businesses into paying for unordered and unauthorized supplies. Businesses receive deliveries to their place of business, and assuming the order was placed by a company employee, they accept the delivery or pay for the supplies. They later find that the order was never authorized. Some discover that the boxes are empty. The business is left with unordered items and the nearly impossible task of recovering the money paid for the fraudulent delivery. Another variation is when swindlers call a business falsely claiming to verify an existing order or asking for information about office equipment, such as the serial number of the copier, etc. Shortly thereafter, a delivery is made of low-grade products and an overinflated invoice that the scammer hopes will be paid.

Businesses should designate a person or team of employees to handle supply orders and payments. Employees should be trained not to provide information regarding their office equipment or supplies to unsolicited callers. Instead they should gather the caller’s information and inform them that a message will be relayed to the appropriate individual that handles the orders for the office. Never provide the name of this person because the scammer can use this to claim that person authorized the order. If you receive unordered products, refuse the delivery. Even if an employee mistakenly agrees to accept the delivery, a business is not required to pay for unordered supplies. They are considered a gift and do not have to be returned.

Web of Lies

In this scenario, businesses receive calls or perhaps an invoice claiming their web address is about to expire if they do not immediately pay the renewal fee. In reality, they are not responsible for handling domain registration. Instead they are hoping that the business will be too busy to investigate and pay the fees.

Know who actually maintains your company’s domain information, web address, and the website host. They should be contacted directly with any inquiries about the account. The service contract should have information on the expiration date. Most legitimate companies will give advance notice that the registration is about to expire.

Bogus Checks

A business may receive something in the mail that appears to be a rebate or refund check. Cashing the check may mean the business is agreeing to be billed for a product or service that is unwanted, such as an online directory listing or Internet access.

Before rushing to the bank to deposit the check, read the fine print to ensure you are not agreeing to enroll in any unwanted program or service. Check out the company that mailed and issued the check. Call them to verify what the check is for and the conditions of cashing it. If in doubt, deposit the check into the shredder.

Charity Cons

Scammers are not above using a charitable cause to pull a scam. They contact businesses and impose on their generosity, claiming they help different groups, such as firefighters, veterans, teachers, and even children. They may use names very similar to well-known charities to pull off the scam. The business makes a donation, believing they are helping a good cause. Meanwhile, the fraudsters pocket the money and disappear.

Businesses should be on the lookout for these types of scammers especially around the holidays or after a major disaster. It is best to research the charity or cause before making any type of monetary donation. Consider composing a list of the charitable organizations to support and stick to donating to those causes, while politely declining other solicitations. If the temptation to make a contribution to an unknown cause or charity is compelling, research the organization to make sure they are legitimate.

Directory Treachery

Swindlers perpetrating this type of scam deceive unsuspecting businesses into paying for fake or unauthorized Yellow Page or business directory listings. They call, email, or fax businesses claiming they are verifying information for an existing listing. Believing that the order was legitimately placed, the employee willingly gives up details such as address, phone number, or other information the caller claims is for verification purposes. The scammer then sends an exorbitant invoice and demands payment for a directory listing. Most often, the directories don’t even exist or are useless and are never distributed or promoted. Often, online directories are simply websites with listings of various businesses. If the business refuses to pay, they may be threatened with debt collection or legal action. Or, they may offer the business a discount to get the business to pay something. They may even agree to cancel the listing and cease future billing, but turn around and sell the company information to another shyster that will attempt to con the business at a later date.

Ignoring unsolicited contacts offering directory assistance is probably the best course of action for a business. Instead, seek out proven and legitimate avenues that provide business listings. Verify a renewal invoice to ensure it is in fact the directory company you have an agreement with.

Protecting Your Business

As the old saying goes, knowledge is power. Businesses should educate their employees on these and other scams that may affect their business. Post reminders and have regular meetings to keep staff updated and be sure to instruct new hires on scam warning signs. Be cautious when contacted by unsolicited salespersons. Pay attention and review invoices that are sent to your business. Make sure your accounting personnel or staff designated to pay your invoices are aware of whom your regular suppliers are and which services your company has authorized. Also, spread the word to colleagues and other businesses so they are aware of the dangers scammers pose.

If you have received a fraudulent invoice, been contacted by a scammer, or fallen victim to a con, file a complaint with BCA. In many cases, scammers may not respond to complaints, but there have been instances where businesses have recovered money through our mediation process. Even if this is not the case, the reported complaints are available for others to view in order to assist them in foiling these swindlers’ plans.

BCA members are offered a variety of benefits that help protect and promote your business. Arbitration services to keep you out of court and reduce legal fees, boosting public confidence in your business, promotional tools and alerts on trends that affect your business are just a few of the benefits. Click on the link for details about member benefits and to sign up.

About Business Consumer Alliance:

Business Consumer Alliance (BCA) is a non-profit company that started in 1928. The broad purpose of BCA is to promote business self-regulation. BCA's mission is achieved by assisting consumers in resolving complaints with businesses and using that complaint information, along with other relevant information such as customer reviews, to forecast business reliability. With community support, BCA can identify trustworthy and ethical businesses and warn the public to avoid unscrupulous businesses whose purpose is to defraud the marketplace. BCA also helps businesses promote themselves by providing services and tools to protect their business and reach out to their customers. BCA obtains its funding from member businesses who support the mission and purpose of the organization and who agree to abide by high standards of ethical business practices.