Five Small Business Scams
Large companies have entire legal and logistics departments to tackle con artists who try to take them for a ride. But harried owners of small businesses often tackle any issue that comes up—and sometimes don’t know what’s a legitimate expense and what isn’t. Here are some of the common swindles called out by the U.S. Small Business Association (SBA), and what you can do to fight back.
1. Directory Listing: You get an invoice for a Yellow Pages or other directory scam that you never actually purchased—and that may not even actually exist. If you ignore it, the scammers double down and send collection notices and tack on late fees. Sometimes they’ll even provide a “discount.” You may have inadvertently “verified” or “confirmed” an order without knowing it in exchange for a “free” listing.
2. Supply Ghost: If an order of office supplies shows up at the door that you didn’t order (or even empty boxes!), the intuitive thing to do would be to assume someone else make the buy and go along to pay the invoice then and there to the delivery person who is putting on the pressure for payment. Fraudsters are counting on your instinct to be agreeable and pay up immediately.
3. The URL Hustle: Hardly anyone remembers off the top of her head when her company’s domain address expires, so when an urgent message to renew your registration comes through, it’s natural to want to stave off any outages to your website. You might also get messages that your website contains trademark or patent infringements and to remedy them, you’ll need to pay a fee to the something that sounds very much like the legitimate United States Patent and Trademark Office. Unfortunately, the con artists have nothing to do with keeping your web link live or protecting any kind of trademark.
4. The Fake Charity: Representatives take advantage of civic-minded folks when they solicit donations for fake causes that seem worthy, such as support for firefighters, police, veterans and disadvantaged kids—and go the extra mile by calling their business something similar to a reputable cause, making it all the more confusing. These groups who need the help the most will never see your dollars, and you can wave your tax deduction bye-bye as well.
5. The Check Cheat: Everyone loves surprise money in the mail, but beware! That “refund” check you cash might actually be the first step in signing you up for a service or product you didn’t want, and recurring bills that will be a nightmare to stop.
How to Protect Yourself From Scams
Very few legitimate businesses will demand cash on the spot. You can also use a credit card that offers protection in case you need to dispute and reverse the charges.
If you find out too late that you’re the victim of a scam, or about to be, there are four main places to lodge your complaint:
The Federal Trade Commission (FTC) so it can shape its law enforcement agenda when it spots fraud patterns.
The Better Business Bureau so that any verified violations become part of the vast listing of businesses.
The United States Postal Service if your scam involved the U.S. mail.
Your state attorney general to help escalate and resolve an issue.
Finally, said the FTC’s Lesley Fair in the organization’s blog, the first line of defense is to train your employees to be on the lookout for scams. “Even if your office isn’t big enough for a formal procurement process, assign one staffer as the go-to person for periodic purchases like directory listings or office supplies. Calls asking to ‘confirm an existing order’ should go to them, too. In addition to foiling fraudsters, it just might help keep your expenses in check,” Fair said.