Becoming a victim of fraud can have a negative financial and reputational impact on a business and the Better Business Bureau (BBB) recommends business owners train their staff to recognize seven common scams that prey on small companies.
Every year the BBB receives complaints from small business owners who have fallen for an invoicing scam or were misled into paying for products and services they didn't want. Scammers aren't 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 to get it.
"Small business fraud can come from internal threats, such as employee fraud, or from external full-time scammers," said Steve J. Bernas, president & CEO of the Better Business Bureau serving Chicago and Northern Illinois. "Because small business owners may often lack the time and resources to fight fraud, they are a popular mark for any number of different scams."
The BBB is warning small business owners to look out for the following scams:
1. Directory Scams - A perennial problem that has plagued businesses for decades involves deceptive sales for directories. Commonly the scammer will call the business claiming they just want to update the company's entry in an online directory or the scammer 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. 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.
3. Stolen Identity - Scammers will often 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 off by the scammers think the real company is responsible.
4. 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 the BBB saying the company has received a complaint. If you receive a suspicious e-mail from a government agency or the BBB, don't click on any links or open any attachments. Contact the agency or the BBB directly to confirm the legitimacy of the e-mail.
5. Office Supply Scams - Some scammers 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.
6. Overpayment Scams - 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 scams target any number of different companies including catering businesses, manufacturers and wholesalers.
7. 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.
For more advice on how to manage your business effectively, visit www.bbb.org.