Being vigilant against fraud is not only important for a company’s bottom line; it also strengthens customer trust in the business. Becoming a victim of fraud can have a negative financial and reputational impact on a business, and Better Business Bureau recommends owners train their staff to look out for seven common schemes that prey on small companies.
Every year BBB receives thousands of complaints from small business owners who fell for an invoicing scheme or were misled into paying for products and services they did not want. Scammers are not always trying to steal money from a business; sometimes they are after a company’s financial or customer data and will use many kinds of high and low-tech methods for getting it.
“Small business fraud can come from internal threats, such as employee fraud, or from external full-time sources,” said Karen Nalven, President of BBB Serving West Florida. “Small business owners are a popular mark for any number of different schemes, often because they lack the time and resources to fight fraud.”
BBB is warning business owners to look out for the following seven schemes that commonly target small companies:
1. Directory Schemes – A perennial problem that has plagued businesses for decades involves deceptive sales for directories. Commonly, a call is placed to a business claiming it is necessary to update their entry in an online directory, or they might lie about being with the Yellow Pages. The business is later billed hundreds of dollars for listing services they didn’t agree to or for ads which they thought would be in the Yellow Pages.
2. Office Supply Schemes – These schemes prey on small business owners hoping that they won’t notice a bill for office supplies like toner or paper which the company never ordered. Every year BBB receives thousands of complaints from small business owners who were deceived by office supply companies and billed for products they didn’t want.
3. Overpayment Schemes – Be extremely cautious if a customer overpays using a check or credit card and then asks you to wire the extra money back to them or to a third party. Overpayment schemes target any number of different companies including catering businesses, manufacturers, wholesalers and even sellers on sites like eBay, Craigslist and Etsy.
4. Data Breaches – No matter how vigilant your company is a data breach can still happen. Whether it’s the result of hackers, negligence or a disgruntled employee, a data breach can have a severe impact on the level of trust customers have in your business. You can learn how to defend your company from a data breach for free with BBB’s Data Security – Made Simpler at www.bbb.org/data-security.
5. Vanity Awards – While it’s flattering to be recognized for your hard work, some awards are just money-making schemes and have no actual merit. If you are approached about receiving a business or leadership award, research the opportunity carefully and be wary if you’re asked to pay money.
6. Stolen Identity – Some unethical entities pretend to be a legitimate company for the purposes of ripping off consumers. When it comes to stolen identity, the company doesn’t necessarily lose money, but its reputation is potentially tarnished as angry customers who were ripped off think the real company is responsible.
7. Phishing E-mails – Some phishing e-mails specifically target small business owners with the goal of hacking into their computer or network. Common examples include e-mails pretending to be from the IRS claiming the company is being audited or phony e-mails from BBB saying the company has received a complaint. If you receive a suspicious e-mail from a government agency or BBB, don’t click on any links or open any attachments. Contact the agency or BBB directly to confirm the legitimacy of the e-mail.
For more advice on how to manage your business effectively, visit www.bbb.org/us/Business-Resources/.
BBB, the leader in advancing marketplace trust, is an unbiased non-profit organization that sets and upholds high standards for fair and honest business behavior. Businesses that earn BBB accreditation contractually agree and adhere to the organization’s high standards of ethical business behavior. BBB provides objective advice, free business BBB Reliability ReportsTM and charity BBB Wise Giving ReportsTM, and educational information on topics affecting marketplace trust. To further promote trust, BBB also offers complaint and dispute resolution support for consumers and businesses when there a is difference in viewpoints. The first BBB was founded in 1912. Today, 125 BBBs serve communities across the U.S. and Canada, evaluating and monitoring more than four million local and national businesses and charities. Please visit www.bbb.org for more information about BBB.