Scams Targeting Small Business: Be on the Lookout!

As long as there have been businesses, there have been thieves trying to take advantage of them. And as technology has advanced, methods of cheating have kept pace, making it more difficult than ever for business owners to outsmart thieves targeting their companies.

Some of the scams listed here have been around for many years, and others are on the cutting edge of technology. Make sure your employees are familiar with them so you can lessen your chances of becoming a victim.

1. Insurance fraud 

Some con artists specialize in claiming to “slip and fall” at your place of business and suffer soft-tissue injuries that don’t show up on x-rays. Others will watch out for vehicles displaying your business name so they can slam on their brakes in front of them and claim injuries from the rear-end collision they engineered. Make sure you have enough insurance coverage to protect yourself against these scams, and consider investing in security cameras for your business and dashboard cameras for your company vehicles.

2. Phishing schemes 

Phishing emails appear to be from a legitimate sender, but they’re actually designed to capture valuable data like bank information, passwords or credit card numbers. You may receive a message, supposedly from your bank, claiming that your online account has been compromised, or from the IRS saying you’re being audited. Clicking on the link inside the email takes you to a website that is often an exact copy of the legitimate site, where you enter information allowing the scammer to steal from you. Make sure your firewalls and anti-virus software are up to date, and if you receive an email asking for confidential information, instead of clicking on a link or opening an attachment, call the sender directly (from a phone number you know is correct) to verify the legitimacy of the email.

3. Office supply scams 

Posing as your regular supplier, the scammer will call or email to “remind” you that it’s time to re-order whatever he’s selling (copier toner and paper are especially popular). If you are tricked into agreeing, you’ll soon receive an order of overpriced merchandise. Be sure your staff knows about this ploy, and set up ordering procedures that require a purchase order and signature. A related scam is sending merchandise you never ordered, and then harassing you for non-payment. Don’t worry--according to the Federal Trade Commission, you have the legal right to keep unordered merchandise as a “free gift.”1

4. Bank account takeover 

“The most common and dangerous scam for small businesses is account takeover,” according to Michael Benardo, Chief of the FDIC’s Cyber-Fraud and Financial Crimes Section. “By sending fake e-mails and using fake Web sites to deliver malicious software, such as keystroke loggers, fraudsters may be able to obtain the IDs and passwords for online bank accounts and then make withdrawals from accounts.”2 In addition to using caution when online, be sure to monitor your bank accounts daily to make sure no unauthorized electronic transfers are being made. Ask your bank what anti-fraud alerts they may offer.

5. Directory scams 

Con artists may call claiming they want to update your company’s information in an online or printed directory. Seems innocent enough, but what they’re actually doing is getting your okay to be billed for a listing in the directory. After you receive a hefty bill, you may find out that the directory doesn’t exist, or that the scammers only print enough copies to give out to the people listed in it. Again, education is the key. Tell anyone who may answer the phone about this scheme.

6. Vanity awards 

Many business people fall victim to schemes that claim they’ve been selected to be in a “prestigious” publication featuring outstanding people in their field. Of course, there are expenses involved, either to cover printing costs or to order a number of books for family and friends. Make sure the organization offering to honor you is legitimate, and put your ego aside long enough to do some thorough checking before shelling out any money. 

7. False invoices 

Your company probably receives many bills every month, so it’s relatively easy for a scammer to slip in a fake invoice. You may be billed for advertising that never ran, memberships to nonexistent trade organizations, or office supplies you didn’t order or receive. Thieves may even do some research to find out who your suppliers are so they can create invoices with familiar-sounding names. Using accounting software or online banking that lists vendors’ names and addresses should help avoid some of these problems, but it all starts with making sure employees handling invoices follow proper procedures and question any bill without proper backup. 

8. Office intruders 

Most offices have many visitors during the course of the week: mail carriers and delivery people, repairmen, solicitors and salespeople. If you don’t have someone screening visitors at the door, you may be setting yourself up for theft. That “repairman” claiming your copier needs to be switched out for a newer model may wheel it out the door and never return. Some gangs of thieves send out junior members to distribute flyers just so they can get inside the building, see what might be worth stealing, and check out your security system. If you don’t have a reception desk where people must check in, make sure employees know about these schemes and aren’t afraid to question visitors they don’t recognize.

9. “Delinquent” utilities 

Scammers know that small businesses depend on electricity, internet connectivity and phone service in order to operate. They may call claiming that the bill for a vital service is overdue, and threaten to cut off the electricity or disconnect phone service if payment isn’t made immediately. They’re counting on you being so panicked that you’ll agree to pay the “bill” by credit card or prepaid debit card over the phone. Legitimate companies will send out written notices giving you several chances to pay before disconnection. Call the service provider at the phone number on a recent bill to see whether there is actually a problem with your account.

10. Valuation fraud 

Business owners may receive a fax or email from a “business broker” offering to find a buyer interested in purchasing their company. If you take the bait, they’ll send someone out to give you a proposal and take a large down payment for the valuation, but that’s the last you’ll hear from this fake company. If you’re thinking of selling, contact a reputable business broker and make sure to get references before making payment.

The best way to avoid scams is to educate yourself and your employees about them, and then emphasize the importance of being constantly on the lookout. Make sure your anti-fraud software is updated and your security procedures are in place, and you’ll be much safer from scam artists trying to make you a victim.