6 Scams That Target Small Businesses

Here are the typical ways criminals try to weasel money out of your business.
June 21, 2012

In May, a small plumbing company in Monroe, La., found itself narrowly escaping a widespread phishing scam when they received an e-mail from the Better Business Bureau claiming that a customer complaint had been filed against them. Believing the e-mail to be legitimate, they clicked on the accompanying link, which downloaded viruses on two of the business' computers. Luckily, they had the malware infections removed before any important information was leaked.

Unfortunately, not everyone is as lucky. Just this month, a Seattle restaurant owner became victim to an identity theft heist when two men put spying malware in his sales systems. They did the same to several businesses and sold at least 44,000 credit card numbers to an unidentified website.

Small businesses, especially newer ones, are easy targets for scammers. The best way for companies to protect themselves is to be aware of them. These six scams have been known to prey on small businesses.

The overpayment scam.

In overpayment scams, the scammer expresses interests in expensive goods that a business is selling. The scammer then proceeds to send over a check that exceeds the cost of the item and requests that the victim wire the difference after the check has been deposited into an account. Eventually, the realistic-appearing check will bounce, leaving the victim to pay the entire amount.

How to avoid it: Always make sure to get all information from your customer, including full name, address and telephone number. Avoid wiring funds for any reason—this request should automatically raise red flags.

The vanity scam.

A vanity scam preys on one very gullible aspect of humans—their pride. This scam is listed as one of the top con jobs targeting small businesses. In a vanity scam, a business is contacted about winning an award and asked to pay the partial or full amount of the cost of receiving the award. However, these are bogus organizations that often continue to charge the cardholder yearly "membership fees."

How to avoid it: Always research the organization calling to offer the award. A simple online search will yield several complaints and warnings.

Phishing scams.

Phishing scams appear to be legitimate e-mails to the viewer, but are fraudulent messages that usually download viruses into the victim's computer when the e-mail is opened or links within the e-mail are clicked. These viruses capture personal information, such as bank details, Social Security numbers and credit card accounts. Phishing is a huge threat to businesses because of the vast amount of important information stored on computers.

How to avoid it: Scan the e-mail carefully and look out for grammar mistakes and other inconsistencies. Hover your cursor over the links without clicking and you will be able to see the address. Most new Internet browsers are equipped with anti-fishing software, so be sure that your system is up-to-date and protected.

The TTY scam.

During a TTY scam, callers can remain anonymous and type messages to an operator, who relays the message to the caller's recipient. This is perfect for scammers, because operators cannot disclose where the call is coming from. The scammer proceeds to request an expensive and large item from the business, pays with a stolen credit card and requests a check for the large shipping fees that the scammer agrees to pay for in advance.

How to avoid it: Ask the person to verify the card verification code and provide the customer service number that is printed on the back of all credit cards. Inform the caller that you will verify the information with the bank.

The "who's who" scam.

Also known as "false billing," these scammers contact businesses requesting to update the company's information in a directory. Usually, they claim they are from the Yellow Pages. During the conversation, the scammer records the phone call and later bills the company for being listed in the directory or for placing ads never purchased, providing doctored recordings as evidence. When the company refuses to pay, the scammer threatens legal action, usually resulting in the company cutting a check to stop the hounding.

How to avoid it: Make sure your employees are aware about this type of scam and only allow a limited number of employees to deal with business transactions. Most important, don't let hounding lead to your forfeit if you aren't completely sure you are being charged fairly. Report sketchy companies to the Better Business Bureau.

The fax-back scam.

This scam can be easy to fall for because all you have to do is fax a paper back. In fax-back scams, an unsolicited fax comes in offering amazing deals and discounts on office supplies, landscaping, directories—just about anything. All the business owner has to do is fax back his or her request to a premium number, which charges the company a few dollars per minute for a fax that will take a while to go through.

How to avoid it: If you're interested in the offer listed in an unsolicited fax, research the details. The fax-back premium rate service number is 190. Keep in mind the age-old adage, if it's too good to be true, it usually is.

Have you fallen victim to a small-business con job?

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