Consumers aren’t the only victims of fraud. As long as there have been businesses, there have been a number of scams that have affected them, from directory and invoice scams to the bigger threat of data breaches today due to technology advancements. Everyone has heard about the large data breaches that recently affected large retailers such as Target, Home Depot and Neiman Marcus. But many small business owners don’t understand how fraud and scams could end up hurting their bottom line and don’t take necessary measures in order to protect themselves. In addition, new businesses may not have the resources they need in order to protect themselves.
Small business owners should be aware of the different types of fraud so they can better protect themselves, their employees and their bottom lines. The threat to your business data and your customer information should put your business on high alert for protecting what is your most valuable resource-your information. Protecting business information itself-corporate secrets, banking information, accounts receivable/payable, customer information-is imperative. The Federal Trade Commission has stated it is a business’s responsibility to provide security for their systems that will protect their consumer information. It’s critical to spend the time and the dollars to hire a forensics IT person to go through your computer system and check it for every possible way a hacker could use to get through it and providing a block and firewall to stop them. Continually review your security measures as hackers revise their methods. Here are some of the most common deceptive business practices.
Phony Invoices
For years, Better Business Bureau has head from businesses who receive fake invoices demanding payments for products or services that they never ordered or received. Sometimes it’s passed along to accounts payable because the amount is low enough that it doesn’t initially raise a red flag. It’s important to have a system in place to match your purchase orders to your invoices and then make sure you are paying the right people. Sometimes, phony invoices are disguised as solicitations. The business will receive an invoice that looks like you are renewing an online directory listing or an ad in the Yellow Pages, even when you don’t have any of those listings. When you look at the “invoice” closer, there is fine print at the bottom which is actually a solicitation for your to participate in one of these activities. Look carefully at bills because a fake invoice can look legitimate and you might accidentally pay for it.
Directory Scams
A problem that has plagued businesses for decades involves deceptive sales for directories. Commonly, the scammer will call the business claiming they want to update the company’s information for an online directory or the business owner will receive an “online directory” renewal notice. Scammers are counting on the fact that business owners are busy and will make these notices appear legitimate, local or industry-targeted. Keep a list of the directories you are published in and evaluate the values of those directories on an annual basis.
Stolen Identity
Here, scammers 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 their reputation is potentially tarnished as angry customers who were ripped of by the scammers think the real company is responsible. They may set up a fake website and “hijack” your company address.
The scams don’t stop here! Read about the many scams that can affect your business HERE in the Fall/Winter 2018 issue of Tools for Success magazine. You can also pick up a print copy of the magazine at a Progress Bank location near you. Click for a complete list of LOCATIONS.
David Smitherman has been the President and CEO of Better Business Bureau serving Central and South Alabama since 2006. He leads the state’s largest business ethics organization, providing education and information to businesses and consumers statewide.
