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8 Scams Your Small Businesses Need to Be on the Alert For

By December 20, 2019 March 20th, 2020 Business Insurance, Tips & Tools

It’s not only consumers that need to be on the alert for scams. Small businesses are also on the list of targets for scammers. You may think that you would never fall for any of these scams, but a lot of business owners do. The best way to avoid getting scammed is to be alert to the types of scams that are around. So, here’s a list of eight common scams that small businesses fall prey to.

Business Vanity Scams

Great news! You’ve won a local entrepreneur of the year award! Or, have you? Vanity scams are often targeted at small businesses. The scammers will tell you that you or your business has won an award and you will appear in a publication or on a website. Then, the scammers will ask you to contribute to publishing costs. Be careful, because the publication or website might not exist at all.

Unpaid Utilities

Small businesses can’t survive without services like electricity, telephones, and broadband. Scammers know this too. Scammers will phone small businesses and demand payment of non-existent utility bills. The scammers will tell you that If you don’t pay now by credit card or debit card, your service will get disconnected. Legitimate utility companies don’t operate in this way. A legitimate utility company will send several reminders before they disconnect your service. So, don’t get panicked by calls demanding immediate payment. Phone the utility company yourself before you pay anything.

Phony Directories

Phony directory scams have been around for a long time. You may receive a telephone call offering you a listing in a printed or online directory. Or, you may receive an invoice for a directory listing. Often, these directories don’t exist, or they have very low readership or visitor numbers. Sometimes, the printed directories are only sent to the people who paid for listings in them. So, before you pay for any directory listing, make sure that the directory is legit.

Overpayment Scams

An overpayment scam involves someone overpaying you for one of your products. The scammer will send you a money order or check for more than the price you charge. Or, the scammer may send you some kind of proof of an online overpayment. The scammer will then ask for a refund of the overpayment. You send the refund, but the original payment turns out to be fake. You will have refunded an overpayment that you never had.

Account Takeover

One of the most common frauds against small businesses is an account takeover. This is where a scammer takes over the control of your business bank accounts. The scammer will then withdraw money or make payments from the account. Scammers gain access to internet banking passwords using several techniques. Scammers may use phishing emails or fake bank websites to get your banking details. Or, thieves may use keystroke loggers to gain access to your internet banking ID and password. The best way to guard against bank ID fraud is always to be on your guard. Be on the lookout for suspicious emails and websites that may be fake.

Fake Invoices

Even a small business might receive hundreds of invoices each month. So, it’s easy to overlook a fake invoice if you are very busy. You may get fake invoices for any type of supply. Some of the most common types of fake invoices, though, are for advertising and subscriptions. The way to avoid a fake invoice scam is to have a good invoice approval system in place. Whoever ordered the goods or services should always check and approve an invoice before the supplier gets paid.

Personal Injury Scams

Some people will fake injuries so that they can claim compensation from a business. They might say that they slipped on a wet floor in your offices, for example. Some people will engineer accidents with business vehicles and then claim compensation. Personal injury claims can be costly and difficult to disprove. So, a small business needs to protect itself against false personal injury claims. The best way to guard against fake personal injury claims is to install security cameras. It is also wise to make sure that your business has sufficient personal injury insurance cover.

Tech Support Scams

Tech support scams involve tricking small businesses into paying for fake support services. The first sign of a scam may be a popup box appearing on a computer telling you that you have a virus. Or, you may receive a telephone call advising you that your computer systems are at risk. The scammer will then offer to solve the tech problem for you for a price. If you pay a tech support scammer, you will be wasting your money. If you give the scammer remote access to your computer, it could lead to further problems. If a scammer gains access to your computer, they might infect your systems with malware.

The above are only eight of the ways that thieves may attempt to scam money out of a small business. There are other scams that target businesses, and scammers are always on the lookout for new ways to con businesses. So, don’t let your guard down. Being cautious may take a bit more time, but it could save a lot of money.