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5 Tactics to Protect Your Small Business from Scams
Small Business Beware! According to the Better Business Bureau, scams continue to be a growing problem for small business. Knowing what to look for and learning the warning signs are essential to protecting your small business and avoiding scams. In one such story. Gina, the owner of a pet boarding and grooming service in Wisconsin, was baffled and somewhat alarmed by a phone call. A man claiming to represent a Yellow Pages firm was demanding payment for past due invoices allegedly for advertising Gina purchased for the business. It turned out to be a scam. As Gina recounts in a recent Better Business Bureau report on small business scams: “He [told] me if I pay now, I will only owe $1,701.06. But if I don’t pay within one week, I will owe for all of 2017, all of 2018, plus late fees [and] lawyer fees.” Gina’s experience is just one of many stories included in the BBB report on the proliferation of scams targeting small business. The study was based on a survey of 1,200 small businesses in the United States. “Despite many businesses feeling they are at reduced risk of being scammed, about 63 percent of small businesses were aware of being exposed to (i.e., targeted by a scammer) at least one type of scam in the past three years,” the report said. “Small businesses of all sizes were targeted.” “Overall, 13 percent of businesses responding to the survey indicated they had been harmed (i.e., lost money or information) by a scam (Figure 6). Of those harmed, 80 percent lost money. In addition, 19 percent of those reporting they were scammed lost information, 11 percent indicated their reputation was compromised and 5 percent indicated their business experienced a decrease in customer trust as a result of being scammed.” So what are the prevelant scams small business owners should worry about? Here are the 5 listed by The Better Business Bureau:
1. Tech Support ScamsThis is all too familiar to consumers. You’re working at your PC and suddenly an alarming message pops up warning that your system is at risk. “Scammers pretend to be from a well-known company,” the report says. “The goal is to collect money, gain access to the computer, or both. The scammers may request payment from an employee to pay them to fix a problem that doesn't exist or enroll the business in a bogus or useless computer maintenance program.”
2. Government Agency Imposter ScamsLike the recent “official reporting” scam recently reported by The State of Connecticut In this scam, someone pretending to be employed with the government threatens to “suspend business licenses, impose fines, or even take legal action if the business doesn’t pay taxes, renew government licenses or registrations, or pay other fees.”
3. Directory Listing and Advertising ScamsAn unsuspecting small business owner is tricked into paying for advertising or a listing that he or she never purchased or ordered. Gina, the small business owner from Wisconsin, was a target of this type of scam. It is important for a business owner to keep accurate records of accounts payable. If you receive an invoice you were not expecting, always investigate before paying it. Too often, scammers come off as nice, professional people. Even if they are polite, do not assume they are legitimate. Do not let the scammer make you feel isolated and backed into a corner. When in doubt, ask a colleague for another opinion.
4. Fake Check ScamsSomeone asks your small business to deposit a check, and then wire a portion of the funds to a third party. “The scammers consistently have a good story to explain the overpayment, such as they need the business to cover taxes or fees, purchase supplies or something else. By the time the bank discovers the business has deposited a bad check, the scammer already has the money,” the report says.
5. Bank/Credit Card Company Impostor ScamsThe scammer pretends to be a representative of a bank or a credit card issuer. The “rep” says he’s attempting to verify some account information, which turns out to be a trap to obtain credit card or banking information.
The BBB report is part of a broader initiative launched by the Federal Trade Commission to help small businesses recognize and avoid scams. “If you own a small business, or are part of a non-profit organization, you spend a lot of time and effort making sure the organization works well,” the FTC says in a new section titled, “Scams and Your Small Business.” “But when scammers go after your organization, it can hurt your reputation and your bottom line.
Your best protection? Learn the warning signs of scams targeting small business. Next, educate your employees and colleagues what to look for so they can also evade scams.”
