Old-School Scams: Don’t Let Your Business Get Conned

by Kevin Casey on February 28, 2014
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Malware, phishing emails, and other online scams tend to draw the most attention these days when it comes to keeping your company secure. But plenty of con artists who target small businesses go old-school, using the phone, mail, or face-to-face interaction to find their marks.

To avoid becoming the next sucker, sharpen your fraud-detection skills by looking at some common offline scams aimed at small businesses and their employees.

Utility Scams

Crooks posing as representatives for the electric company and other utilities plague small businesses from coast to coast. A common tactic: They threaten to turn off the power immediately if a past due bill isn’t paid, usually requiring that a prepaid debit card, such as MoneyPak, be used to settle up.

Police in Sebastopol, Calif., recently warned area businesses of con artists posing as employees of power company PG&E, for instance. A pizza parlor owner in Maine, meanwhile, lost $1,170 when he thought a caller who claimed to be from the local power company was legit; he paid up for fear of having to close his busy restaurant, only to find out the shutdown warning was a scam.

When in doubt, call the utility company directly to verify the bill. Use the number listed on its public website rather than one given to you over the phone or in a suspicious notice. Demands to pay via prepaid debit card or wire transfer should set off your fraud alarm bells. Ensure that your debt is real before you pay up — if it turns out to be a con, recouping your money will be almost impossible because you’re basically handing cash to a stranger. MoneyPak reminds customers of that in its fraud protection tips.

Charging for Free “Work Rules” Posters

ConsumerAffairs breaks down this scam, which recently resurfaced in Washington state: A business receives an official-looking letter that says it must pay for and display posters detailing state and local labor laws, such as occupational safety rules, minimum-wage requirements, and so forth. The underlying threat is that by not doing so you’ll risk noncompliance with state and local business regulations, which could mean expensive fines or worse.

The posters are, in fact, real — but they do not cost hundreds of dollars. In Washington state, for example, the posters are available free of charge from the Department of Labor & Industries and other agencies. Treat such letters with skepticism, and check with your state and local agencies to find out what’s required and what’s available as a free resource.

Tax Swindles

Like the regulatory scam above, fake tax-related requests often arrive in the guise of a vaguely official-looking letter demanding that you file a particular form or pay a certain fee. If it looks odd, it probably is. Check with your accountant, your lawyer, or the taxing or regulatory authority when in doubt.

A December rip-off in Ohio, for example, tried to convince businesses there to file an unnecessary state compliance form — and pay a bogus $125 fee. The scammers were likely trying to dupe owners who were organizing their year-end tax paperwork.

Indeed, it’s the time of year for tax scams. The IRS offers guidelines to small businesses for avoiding tax-preparer fraud and for reporting tax scams.

Fake Invoices, Listings, and Offers

A pet-grooming business in Phoenix tells a local news station that it receives multiple phone calls a week offering too-good-to-be-true deals on things like office supplies or business services. Among other problems: They’re probably fake. Dubious offers for “premium” listings in business directories, phone books, and other guides are likewise common. The Phoenix-area Better Business Bureau office also notes that crooks will send fake invoices and hope they slide by in a pile of legitimate bills.

Notice a theme running through these offline cons? Many of them try to take advantage of the nonstop nature of running a small business. Scammers bank on the chances of catching an owner at a particularly busy or distracted moment. Take the fake invoice: If you’re speeding through a pile of bills so you can get back to making money instead of spending it, you might not notice a spoof.

The bottom line: Don’t pay a bill if you don’t know exactly what it’s for. Time may be money, sure, but your hard-earned cash really is money. Don’t send it to a crook.

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