If It's Too Good to be True, It Is

It’s the hidden danger for businesses. That’s because owners may not even realize they’ve fallen victim until the damage has been done. The culprit: scams that target small businesses. Not only is the company financially damaged, but its reputation is also compromised. So, it’s important to learn about common scams against small businesses (and what to do about them).

USA.gov identifies the following scams that commonly target small businesses:

Telephone Relay Fraud

A “customer” places an order using the TTY system, which is meant to help the hearing impaired. The “customer” explains that their preferred shipper won’t take a credit card and asks the small business to wire the money to the shipper (and add the extra cost to the purchase price and charge the customer’s credit card).  The wired money ends up with the customer who uses a stolen credit card to complete the order. So the business loses the goods ordered and the money wired. And by law, the operator can’t disclose the origin of the call so the customer can’t be traced.

What to do: Ask the customer to provide the 800 number on the back of the credit card along with the four-digit verification code. Tell the customer you will verify this with the issuing bank and call them back. If the customer objects, tell them that this is your standard procedure. Abandon the call if the customer does not agree.

Phony Invoices

Most often involving copier, toner paper and maintenance supplies, a “telemarketer” contacts a business saying they represent their current, previous or new supplier. The hope is that a busy or untrained employee will agree to the charge without question.

What to do: Train staff to refer these individuals to the person who is authorized to approve purchases. Ask for all sales pitches in writing. Document purchases by issuing a purchase order to the supplier with an authorized signature and purchase order number.

Vanity Awards

Company targets a small business saying they are being recognized with an award for business leadership. Some are moneymaking schemes that have no merit.

What to do: Research the company bestowing the award to be sure they are legitimate, especially if asked to pay money to promote the award.

Becoming aware of common scams used on small businesses keeps you from falling victim to them. Look for more information at usa.gov. (Link to: http://www.usa.gov/topics/consumer/scams-fraud/business/small-business-scams.shtml)

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