Financial Resource Center


Recognize Scams Targeting Small Businesses

by Center for Personal Finance editors / February 28th, 2011

Small-business owners and self-employed individuals take note: Be on the lookout for scams that specifically target small businesses. "Small-business fraud can come from internal threats, such as employee fraud, or from external full-time scammers," says Alison Southwick, Better Business Bureau (BBB) spokeswoman. "Because small-business owners often lack the time and resources to fight fraud, they are a popular mark for any number of different scams." The Credit Union National Association's News Now reports that the BBB advises business owners to watch out for these scams:
  • Directory scams—Usually the scammer will call a business 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 it didn't agree to or for ads it thought would be in the Yellow Pages.
  • Office supply scams—Some scammers prey on small-business owners and hope they won't notice a bill for office supplies, such as toner or paper, that the company never ordered.
  • Overpayment scams—Business employees should be cautious if a customer overpays using a check or credit card and then asks the business to wire the extra money back to the customer or to a third party. Overpayment scams often target catering businesses, manufacturers, wholesalers, and even sellers on sites like eBay, Craigslist, and Etsy.
  • Data breaches—No matter how vigilant a company is, a data breach still can 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 a business.
  • Vanity awards—While it's flattering to be recognized for hard work, some awards are just money-making schemes and have no actual merit. If you're approached about receiving a business or leadership award, research the opportunity carefully and be especially wary if you're asked to pay money.
  • Stolen identity—Scammers often will pose as legitimate companies to rip off consumers. A company whose identity is stolen doesn't necessarily lose money, but its reputation is potentially tarnished when angry customers, ripped off by the scammers, think the real company is responsible.
  • Phishing e-mails—Some phishing e-mails specifically target small-business owners with the goal of hacking into their computers or networks. Common examples include e-mails pretending to be from the Internal Revenue Service that claim the company is being audited, or phony e-mails from the BBB saying the company has received a complaint. Company employees receiving suspicious e-mail from a government agency or the BBB should not click on the links or open attachments. Contact the agency or the BBB directly to confirm the legitimacy of the e-mail.
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