Beware of Scams Targeting Small Businesses
Every year, small-business owners are swindled out of some $250 million, just by phony telemarketers of office supplies, according to the Senate Committee on Small Business.
To protect yourself from these and other fraudsters, beware of a few common scams that target small businesses.
Fake Charity Pitches
Every time there’s a well-publicized emergency or disaster, scammers solicit donations through phone calls, emails, and printed cards or letters. Sometimes they do this by pretending to work for well-known aid groups, such as the American Red Cross or United Way. Of course, any money you give a fake charity — by cash, check, electronic transfer, or credit card — stays with the scammer instead of reaching any of the victims you believe you’re helping.
If you’re asked to give money and want to donate, take a minute to check out the charity online first. Discard the contact information given to you by a possible scammer and reach out directly to the verified organization of your choice.
Phony Coupon Books
But the value of such advertising depends almost entirely on the book’s actual publication and distribution. Scammers routinely solicit small businesses to buy advertising in phony coupon books that they never print
. You can also get ripped off if a promoter distributes a legit coupon book outside the region where you do business.
To save yourself from paying for worthless advertising, buy into a coupon book only when you trust the publisher after a long acquaintance or checking solid referrals — and even then only after you understand the contract in detail.
Other scammers try to bill you for products you haven’t received, or they charge exorbitant prices for substandard goods. For example:
- They call to find out what office supplies and consumable products you routinely order, then send you a bill that looks routine but charges for undelivered items.
- They call and pretend to be your regular supplier, then offer you the goods you regularly buy at special discounts, provided you put the purchase on a credit card or immediately send a check. After receiving payment, the impostor sends you substandard items — or nothing it all.
- They claim you failed to pay for products previously delivered and threaten to turn your account over to a collection agency or an attorney unless you pay at once.
You can avoid these types of scams by keeping comprehensive, accurate accounts-payable records that allow you to quickly and easily confirm suppliers, past purchase orders, shipments received, and payments due.
As a small-business owner, you’re a ready target for “confidence” operators who will ask you to invest in sure-fire business opportunities, fake franchises, worthless wealth-building information and training programs, questionable foreign-currency trading plans, useless website “traffic builders,” and more. These are often variations on the classic Ponzi and pyramid investment schemes.
As a general rule, don’t pay for any business opportunity until you’ve checked with your trusted advisers (to make sure it’s a sensible move) and fully investigated the people who are making you the offer.