Common Scams Against Small Businesses

May 27, 2015 by Ed Becker

As a small business owner you already have to wear many hats, being a security guard against scams and fraud is just another role that you have to play. It is imperative that you continually keep track of your finances, your employees, and the vendors that you pay. Checks and balances in your accounting and bookkeeping help alleviate some of the attacks that can be launched against a small business. Knowledge is your best tool, stay aware of what scams and frauds are running rampant so that you can take measures to reduce your risk.

Shipping Scam

This is a new scam that uses the names of major shipping companies and even hacked accounts from their records. Once account information is obtained, fake advance payment checks or any type of illegal goods can be sent or shipped. The company and the shipping vendors have no idea that their accounts are being used in this way. Safe guard your account information to reduce your risk for getting hacked.

Selling Documentation or Items that are Free

Scammers use the need for legal certifications, licensing and memberships of recognized named businesses or government agencies to scam businesses. Renewals for permits or state and federal licenses should only come from the official offices, sometimes there are small fees required to obtain legal documents, but you should only pay directly to that office. Better Business Bureau (BBB) accreditation is another name used to attempt to scam small businesses. Either by phone or door to door, shady people will pose as BBB workers offering to sell certificates of accreditation or renewals. They have even enticed businesses by telling them they will be entered into a BBB Lotto when they purchase their accreditation. The BBB issued a statement in regards to this scam, stating that they never sell door to door, nor has there ever been a BBB Lotto.

Employee Fraud

Hiring family and close friends may seem to be a safe and reasonable choice when you own a small business. Putting those friends and family in charge of financial items can put your company at risk of fraud or embezzlement. Allowing a trusted person to have total control over your books is never a good idea, the trust makes it hard to see when there could be issues. This is also true for long term employees, you have gained trust in them and would not ever think they would scam or steal from you. But it happens regularly. Other employee fraud includes: payroll frauds, supply frauds, using business funds for personal use; just to name the most common. Because you trust your family, friends and employees you could lose large amounts of money before realizing it.

Fake Charities & Coupon Books

Preying on business owners’ generosity and desire to give back to their community scammers hit where they are pretty sure they can find pay dirt. Posing as a charity that sounds like or uses well-known names can net scammers well. Advertising in coupon books can be a very lucrative option, especially when it is used for fund raisers in your community. The scam is that someone will sell you space in a coupon book that may never actually print, or that is not even going to be distributed in your area, making your coupon and advertisement worthless.

Business Listings

This is the oldest scam against businesses, even before the World Wide Web. Solicitation for business listings gets the attention of small business owners because they want their potential customers to find them. Selling bogus business listings for print or online is a constant ongoing scam. If you want to ensure your business is listed where your customers can find you, go directly to the company do not jump on when someone calls with a sales pitch.

As a small business owner it is important you stay on top of new forms of fraud. Keeping checks and balances and keeping an eye on even your most trusted employees is the best way to prevent this from happening to your business.