Every day, thousands of small businesses are at risk of being exposed to scams, fraud, and con artists which put their data, their finances, and ultimately, their business in jeopardy. The integration between technology and business operations increases this risk, putting many small business owners who often hold limited knowledge about the internet in a tight spot. Beware these six common small business scams and schemes that target business owners like yourself every day.
Directory Listing Scam
One of the tried and true small business scams, with a little twist, is the directory listing scam. In most cases, this business scam is initiated through a telephone call to an owner or employee of a business, where the caller attempts to “verify” or “confirm” business listing information for an online directory, which does not really exist.
By asking them to verify the information, the caller attempts to trap an owner or employee into confirming the information or simply agreeing by saying “yes,” so they can obtain payment for their fraudulent services. Because these folks do this for a living, they are like bulldogs when trying to get you, or your employee, to say “yes”. They’re talkative brow-beaters who use high-pressure techniques and sometimes threats to persuade an employee into giving them the information they need to pull off their con.
In many cases, these scammers will wait a few weeks before flooding a business’s mailbox with illegitimate invoices marked “urgent” or “pay immediately” – sometimes even stamping a false name or logo to them, asserting the letters are from a larger company, such as the Yellow Pages. Many unassuming business owners may fall prey to this scam and eagerly cut a check to pay the invoice (perhaps thinking they’d forgotten they had signed up for a service). Other business owners who may be less eager to send a check to contact the phony directory scammers and fall further down the rabbit hole, where the scammers, who don’t like to be questioned or hear the word “no,” sometimes resort to threats of legal action against your business.
Businesses who question the services are further hounded with collections notices, more invoices, and then, nasty collections call – though, none of these are truly legitimate. Many business owners often end up paying the scammers to stop the relentless hounding, which is why this is one of the small business scams that has cost U.S. businesses millions of dollars. For those businesses who don’t pay, their information is often sold to the next schemer who will attempt to collect money from them.
Your Business URL or Domain is Expiring
This is one of the intellectual property small business scams that informs business owners through telephone or email that their website URL or domain name is expiring and that they must pay a fee to keep their business operating online. Thousands of these scam emails are sent out to businesses each day, preying on the fears of unknowing business owners and convincing them with a high sense of urgency to save their business from disappearing online. This leads many unaware business owners to panic and pays the fee first, then ask questions later. By then, it’s too late.
Things you should look for and verify before making any payment to “save” their domain name or URL include verifying the sender of the email, checking for bogus email addresses – you can “hover” your mouse’s cursor over the email address to see the full address, and checking for suspicious URLs – again, hovering over the link will provide the full domain name. Scammers are not afraid to use similar sounding website names, email addresses, and other trade dress in an effort to convince the unwary business owner into paying their fees.
Another important tip includes examining the content of the claim for both substance and grammar/spelling errors. If you don’t know, or recognize, who the sender is, or the content is poorly written, it’s very likely the claim is a fraudulent scheme concocted by a con artist or cyber-criminal.
Related: Why Your Business Needs a Cybersecurity Policy
An overpayment scam doesn’t have an official name, but it targets both businesses and individuals. This form of scam sometimes targets individuals selling personal items online. When a business is targeted, a client will sign-up for a business’s retainer services. The client, who will rarely be easy to reach, will send the business a phony check for their first bill and “accidentally” overpay. When they’re contacted about the mistake, the client will request the business deposit the check and refund them the rest of the money – usually through a wire transfer, money gram, or something else. Once they have the funds, the scammers split. Often in these small business scams, the business will end up stuck with the bounced check fee as well as the rest of the funds they sent back to their “client”, often leaving them in a sticky financial situation.
When in doubt, wait until after the check clears your bank, normally 3-10 business days, before ever agreeing to refund an overpayment. If the check bounces, and you cannot get in touch with the folks that owe you the money, you should contact your local law enforcement agency to see if you can file a claim for theft by check, or under the “hot check” laws, as well as alerting your bank that you think it may have been a scam and follow through with any appeals processes for having the bounced check fees refunded to your account.
Tech Support Scams
Small business owners that view technology like former President George H.W. Bush views broccoli, are at risk for being duped by the increasing number tech support small business scams out there. While your computer may be in stellar working shape, business owners or employees may receive anonymous telephone calls from “tech support” scammers. These calls come from blocked or unavailable telephone numbers. The scammer will alert the person that their computer isn’t connecting to Windows, or that their Windows’ license is expiring, that they are from Microsoft and need access to download a new patch, or that they’ve detected a virus in the system and so on. These tech support scams also appear in the form of pop-up messages on your computer, directing the user to call a number to call to fix an “unknown problem”, “increase your download speed”, or to remove a virus with the device.
Once on the phone with them, the scammers always begin by telling them they’ve detected a problem with the computer and provide step-by-step instructions on installing a remote tool that allows the scammer to gain access to their computer. Once they’re in, they make it look like they’ve done just enough to scan the computer and tell the caller they’ve found numerous viruses on the computer that need to be eradicated. From there, they offer “cleanup” services at the cost of hundreds of dollars. With remote access to your desktop, they can also install malicious software including viruses and malware that steal your information and sell it online. Recently, three security researchers used an automatic web-crawling tool to map out the tech support scammers. They dialed the numbers, played along, and recorded the conversations.
You can listen to the phone calls and hear the scripts they use to scam people every day.
The easiest way for most small businesses to protect themselves from this type of scam is to ensure that the latest updates are downloaded and installed automatically, Here is a link to do this for Windows, or use a well-known commercial service that provides malware, firewall, and virus protection. Lastly, make sure that you have a backup of both your files and a system image, preferably online. If you need help in doing this, please see this article that discusses how to choose an IT professional.
The IRS collection small business scams are another one of the oldest tricks in the book. Business owners and individuals receive a telephone call from someone claiming to be an Internal Revenue Service agent and telling them that there are unpaid taxes that they must pay immediately to avoid legal action. For business owners, the claim often relates to employee withholdings and quarterly taxes that businesses are required to submit. Often, they request the fees to be paid by credit card, bank transfer or wire transfer, or the police will come and arrest you.
It’s important that business owners know that the IRS will never contact an individual or business by telephone or email regarding their taxes. The IRS also never requests personal information such as credit card information or social security information over the phone.
Many of these scammers pretending to be IRS agents become frustrated when a person doesn’t immediately or quickly comply and threaten legal action such as lawsuits or to send their accounts to collections, or send the police with a warrant for your arrest, if it isn’t paid, but none of these threats come to fruition, because they aren’t actually IRS agents. If you ever receive such a call, the best course of action is to do nothing other than contact local law enforcement, or your local FBI office, to alert them to the number that the call came from. While most of these folks are overseas, this information does help law enforcement track down the operations and put them out of business.
Rebates or Refund Check Scam
For business owners strapped for cash, a rebate or refund check seems appealing on the surface. Business owners who don’t know any better might deposit the funds into their bank account without thinking twice. Here, the scammer is counting on you chalking up your forgetting that you asked for the rebate because you are busy. In these scams, the rebate or refund check contains fine print that usually isn’t noticeable unless you’re thoroughly examining the check. Hidden within the fine print is an acknowledgment that when the check is deposited or cashed, the person is subscribing to a monthly service and granting authorization to be billed monthly for those services.
As scammers and con artists become more tech-savvy and our demand to rely on technology for the majority of business operations continues to rise, business owners are at more risk than ever of becoming victims of fraud and scams. Those who don’t closely monitor their operations or maintain good communication with employees may find themselves falling down the rabbit hole of numerous scam and fraud traps. The key to protecting yourself, your employees and your business against small business scams is staying informed and never providing a stranger with personal information.