|
Top 10 small-business scams
By Jennie
L. Phipps Bankrate.com
Persistence
pays off in small business -- and petty crime. So if you run a small
business, you need to be constantly vigilant because scammers and
swindlers are an ever-present part of the landscape.
Both the Federal
Trade Commission and the nonprofit National
Consumers League have launched an attack on con artists who
target businesses large and small. Susan Grant, director of the
telemarketing and Internet fraud programs at the National Consumers
League, urges managers to make sure that their employees are aware
of these common cons that make victims of naive employees daily.
Here's a list of 10 rip-offs
that every small-business owner should look out for, plus ways to
avoid becoming a victim.
1. Scammed online
The Con: You get an e-mail
or a phone call offering your company a great-looking Web site that
will cost practically nothing. For good measure, they'll throw in
free Internet access.
How It Works: They want the
money upfront to get started. You send the money, and they disappear.
You don't get Internet access or a Web site. Or if they do actually
build you a Web site, half the information is spelled wrong. It's
so bad that you don't mind that the address is too complicated for
anyone to find.
The Solution: Treat the process
of picking a Web design and access as you would treat the selection
of any other vendor. Insist they provide phone numbers and addresses,
preferably in your area, for other companies that have used their
services. Check the references. Get a written contract that includes
the company's name, address, and telephone number, the price and
payment schedule and a description of what will be done. Before
you sign, make sure the price is really competitive.
2. Bogus invoices
The Con: An invoice arrives
for office supplies. On closer inspection, it's not the same company
from which your company usually buys. Possibly, you didn't receive
the merchandise at all.
How It Works: This one has
a variety of flavors -- the phony invoice, the pretender and the
gift horse. In the most common scam, the crook gets the name and
title of an employee as the "authorized purchaser." The goods are
shipped and so is a bill. The scammer also may pretend to be your
regular supplier offering a "special deal." Usually the deal is
extraordinary -- the price is extraordinarily high. A third common
version offers someone in the organization a free gift. When they
accept, the "gift" comes along with unordered merchandise and a
big bill. The scammer is counting on the company mistrusting the
employee who accepted the free gift, assuming that because they
did, they also ordered the merchandise.
The Solution: FTC officials
testified before Congress that this kind of scam costs small businesses
$200 million a year. The only way to fight it is to have procedures
in place that limits the number of people who can order supplies
-- and who make sure those supplies have arrived. These people should
sign off on every bill to ensure you get what you ordered and nothing
else.
Be warned. These scammers
are excellent collectors and will call often and may threaten your
company with legal action. Don't be intimidated. If you get unordered
supplies, you can't be compelled to pay. The law allows you to consider
them a gift. If you actually ordered the merchandise, write the
company a letter explaining that you believe that you have been
defrauded and offer to return the goods at their expense. Send copies
to your local and state division of consumer affairs and your lawyer.
If the solicitation came via mail, a copy to the Chief Postal Inspector,
United States Postal Service, Washington, D.C. 20260-2100. The FTC
is also interested in hearing. To file a complaint, call toll-free,
(877) 382-4357, or use the online
complaint form.
3. Calling card capers
The Con: Your company calling
card bill lists charges for calls you're certain you didn't make.
How It Works. All it takes
to make a long distance call on a phone card is the number and sometimes
the PIN. Thieves get hold of them by watching calls made in the
airport. Former employees have also been known to remember those
numbers and use them long after they no longer are on the payroll.
The Solution: Ask each employee
to go over their individual calling card bill each month for calls
that look odd. Change account numbers frequently. It might be an
inconvenience, but it will cut down on the likelihood that someone
unauthorized will use them. When you spot an errant call, notify
the calling card company that there has been illegal usage. If you
think you know where it happened -- at a specific airport, hotel
or other facility, for example -- notify its management.
4. Fax me up, Scotty
The Con: Someone calls and
asks for a lengthy rundown on the services that your business provides.
They want your response via fax -- to a fax machine in a foreign
country.
How It Works: Beware of faxes,
letters or e-mails asking you for detailed information about your
products or services and providing only a fax number for you to
respond. These people aren't really interested in buying anything
from your business. The real motivation is to get you to send a
lengthy fax to a foreign phone number, resulting in high charges
on your phone bill. The caller and the phone company are in cahoots.
They split the spoils.
The Solution: Educate people
in your company about fax fraud. If your phone system will allow
you to lock out calls outside of the U.S., that may help solve the
problem. Beware: Area codes in the Caribbean and Canada look like
U.S. numbers, but aren't.
5. Nigerian money offers
The Con: You receive a message
from someone who claims to be connected with the Nigerian government
asking for your help in moving millions of dollars in overpayments
to an overseas account. If you will provide your bank account number,
the funds will be temporarily transferred to your account, and you
will receive a percentage.
How It Works: You comply,
and the scammer cleans out your bank account.
The Solution: Beware of calls,
letters, e-mails or faxes purporting to be from a government official
in Nigeria or any other country, asking for access to your bank
account. Some of these con artists tell very heart-rending stories
and purport to be devoutly religious people. Don't believe a word
of it, and guard your bank account information closely.
6. Slamming
The Con: The name of the
long-distance company on your phone bill is different, and the price
is several times higher.
How It Works: Someone switched
you from your usual long-distance service to another without your
permission. To slam you, all a crook needs is your business name
and phone number. They just call the phone company and ask them
to switch you. Sometimes slammers create phony verification. One
ploy is to pose as your regular local or long-distance phone company
and ask if you are satisfied with your service. The answer you give
to this question is tape-recorded, carefully edited and used to
prove that you want to switch.
The Solution: You can put
a Primary Interexchange Carrier Freeze
on your phone numbers to require the phone company to check with
you before making changes. But if you get slammed by a reseller
of your original carrier, the system doesn't mechanically flag it.
If you've been slammed, notify your local phone company and ask
to be switched back to the original carrier with no "change fee."
Make sure you are reinstated in your previous calling plan, and
ask to be credited for increased charges incurred during the time
you were slammed. The carrier doesn't have to do this, but business
is competitive. If you're a good customer, they may agree.
7. Give me an outside
line, sweetheart
The Con: Your business receives
a call from someone who asks the receptionist to dial 90# to test
a problem with the phone line or to be connected with an outside
line.
How It Works: This scam is
very limited -- so much so that some consider it an urban legend.
It only works on telephones where you have to dial 9 to get an outside
line and the system then allows long distance calls on that outside
line. Older PBX phone systems typically have this feature.
Sometimes the caller asks
to be connected to an outside line as a favor. Other times the scammers
pretend to be from the phone company, claiming to be checking a
problem with the line. The scammer instructs the receptionist to
punch in a code on the keypad that results in the connection to
an outside line.
The Solution: Ask the company
from whom you bought your phone equipment if your system is vulnerable
to this type of scam and what you need to know to protect yourself.
Educate the employees who answer your phone about how your system
works and how to spot PBX scams. Implement firm policies for who
can be connected to outside lines and under what circumstances.
8. Checks out of the blue
The Con: A company sends
you a small check, which you deposit. It's not attached to an invoice,
but you don't let that stop you from keeping the money.
How It Works: A few weeks
later, your bank statement includes checks for items you didn't
purchase. When you track down the checks, they look pretty good,
but they are fraudulent. The scammer has used the small check to
figure out your bank account number and bank routing information.
That allows him to create checks that look just like yours -- including
your numbering sequence. He's using your money to buy things, then
return them and keep the cash.
The Solution: Match each
check to an invoice. And guard your bank account information.
9. Not all yellow pages
are the same
The Con: An invoice for a
directory list bears the familiar "walking fingers" logo and the
name "Yellow Pages." You pay and get nothing -- or at least very
little.
How It Works: The "walking
fingers" logo and Yellow Pages name are not protected by federal
copyright or trademark registration. Anybody can use them. Often
these directories aren't affiliated with local phone directories
and aren't legitimate service publications. The directories may
not exist at all.
The Solution: Call your local
Yellow Pages publishers to see if it is affiliated with the soliciting
company; ask for a copy of a previous directory edition; and check
references.
10. No helping hand
The Con: You're asked to
contribute to a law enforcement or public safety group in your community
or to purchase advertising in publications that seem to be sponsored
by nonprofit organizations. Most, if not all, of the money goes
into a scammer's pocket.
How It Works: While the words
police and firefighter stand out in the solicitation, they really
have no connection with these public services.
The Solution: If you'd like
to help, offer to make the check out to the nonprofit organization
-- not to the solicitor. If this is a legitimate fund-raiser, then
the money will be distributed appropriately.
Jennie L.
Phipps is a contributing editor based in Michigan
|
