As Recently Reported by the FTC: Scammers Use Similar Tactics for Businesses as They Do for Consumers. Your Best Defense is to Stay Informed.
The Federal Trade Commission (FTC) has launched Operation Main Street, an effort with the Better Business Bureau (BBB) and law enforcement to educate small business owners on how to stop scams targeting their businesses. Accordingly, the FTC released a brochure to explain some of these scams and to provide tips for business owners on how to thwart any threats.
Common Scams Currently Targeting Small Businesses
The FTC has outlined over 10 scams that are continually used to target small businesses. You may even recognize some of them as the same type of scams that consumers have reported experiencing. The first step to protecting yourself and your business is to be educated and aware of these scams, which include:
- Fake Invoices—Scammers may try to trick you into paying an invoice for a bill that actually never existed. They will likely try to fake this invoice using products or services your business typically uses, so that whomever pays the bills in your office will assume it’s a normal bill without looking into it, first.
- Office Supplies & Other Products—Similar to creating phony invoices, a scammer may call looking to confirm “an existing order” of office supplies your business likely actually uses on a regular basis. When the unordered merchandise is delivered, the scammer will start pressuring you to pay, possibly even using a recording of your earlier phone call as “proof” that the order was placed. One thing to note, you have a legal right to keep any and all merchandise you did not order, for free.
- Directory Listing & Advertising Scams—Scammers will call your office, asking for contact information in exchange for a free directory listing or free advertising services. Just like with the office supplies scam, they will follow up with a bill and demand payment, pressuring you to pay.
- Utility Company & Government Agency Imposters—These scammers will pose as your gas, electric or water company, or as government agents concerning your business licenses, taxes and even trademarks, and will usually threaten suspension or business closure unless the “unpaid fees and fines” are resolved. Business owners have even been tricked into paying to receive nonexistent grants from faked government agencies.
- Tech Support, Social Engineering, Phishing & Ransomware—Through the internet, scammers have access to your business by posing as a well-known IT company, letting you know there’s a problem with your computer or network security. They will likely ask to access your computer or ask you to pay them for a fake software program to “fix” the issue. Scammers may even trick your employees into giving up confidential information through social media or email targeting that’s made to look like it’s from a trusted source. Recently, the FTC has seen an increase in Ransomware, or when a scammer steals your computer or network’s data and holds it for ransom, often deleting the data forever even after being paid their asking price.
- Business Coaching & Promotion—Some scammers sell fake business coaching services, promising amazing results and exclusive market research to help you promote your business, only to disappear after their payment has been collected.
- Changing Online Reviews—Posting fake reviews is illegal, but scammers still try to claim that they are from some marketing company that can replace your negative reviews or boost your ratings score, for a fee (of course).
- Credit Card Processing, Equipment Leasing & Fake Checks—Be wary of callers who promise financing, such as lower rates for processing your business’ credit card payments or deals over the phone for equipment leasing. And certainly never sign a contract until it’s been thoroughly read and vetted by your own trusted source, like an attorney. A scammer may even try to fake you out by overpaying on a check, and asking that the extra money be wired to a third party to resolve the financing issue.
How to Protect Your Business
As the saying goes, “It takes a village.” An informed business, with informed employees, is a lot harder to deceive than an uneducated one. The FTC shares some great tips on how to protect your business, such as:
- Train your employees to talk to their coworkers if they suspect a scam or fraudulent claim. Scammers often target multiple people at once, so chances are your staff could stop the scam from occurring simply by alerting each other.
- Never send or ask to receive passwords and other sensitive information via email, even if you’re using an internal intranet system.
- Check all of your invoices thoroughly before paying them, including how the bill is being asked to be repaid (pay by wire transfer, reloadable card or by gift card are giveaways of a scam). You may also want to limit the number of employees responsible for paying invoices and make sure the procedures for approving invoices are clear to those people.
- Embrace technology, but don’t trust it completely. Scammers can easily fake caller ID to look like they are calling your company from a business you regularly work with, and can also easily fake emails and websites for reputable companies, too. Never open attachments or download files from unexpected emails, including social media messages (scammers can hack into social media accounts, too).
- Always research a new company online using the term “scam” or “complaint” before doing business with the company. You may find the too-good-to-be-true internet marketing company that’s calling you on a list of scam reports online.
As a small business owner, you likely spend a lot of effort ensuring your organization operates smoothly and efficiently. Taking the time to train your employees and stay updated on scams targeting businesses could save you much more time—and money—in the long run.
For any questions, comments or concerns about fraud protection, you can also contact your local SIS branch Assistant Manager. We are always here to listen and to help!