September 16, 2021

How to Recognize a Small-Business Scam

The fraudsters pump you for information they say will speed you the money. They might even set up fake websites to collect your “application.” It’s all a ruse to get a quick payment, gain access to your bank account, harvest private data like Social Security numbers, or seed your company’s computer network with malware or ransomware.

Such tricks are nothing new. In a 2018 Better Business Bureau (BBB) study, nearly two-thirds of small businesses reported being targeted at least once by scammers in the previous three years, and more than 1 in 8 lost money or sensitive business information. Based on the survey data, the BBB estimated that fraud robs small firms of $7 billion a year. As with the pandemic, natural disasters bring scam artists out of the woodwork to prey on businesses seeking help to rebuild.

Scammers deploy many other tricks to go after small businesses. Here are some of the more common ones, according to the BBB and the Federal Trade Commission (FTC).

Fake invoices: Crooks send phony bills for products and services a business commonly uses, such as office supplies or web hosting, hoping the person responsible for paying invoices is too busy to notice the deception.

Impostors: Con artists pretending to be from government agencies or utility companies threaten legal action, loss of a business license or a power cutoff unless you cough up supposedly overdue taxes, bills or fees. Or they’ll insist you pay for posters on workplace rules that are available free from federal and state labor departments. 

Bogus brand-building: Targeting entrepreneurs eager to raise their profiles, fraudsters claim to be selling listings or ads in the Yellow Pages or another (often nonexistent) directory, or offer business coaching, market research or internet promotion services that turn out to be fake or worthless.

Reputation-fixing: Scammers promise, for a fee, to change negative reviews, boost scores on ratings sites and take other legally questionable steps to boost your business’s standing online.

Business email compromise: Cybercrooks posing as vendors or colleagues send phishing emails, typically to a company’s owner or someone who handles the books, urgently seeking a payment or information about the firm’s employees or accounts.

Small businesses also get targeted by fake check and tech support scams, phantom investors charging upfront fees or retainers to connect you with capital, and unscrupulous sales agents who offer cut-rate deals on equipment leasing or other services but bury onerous terms in the fine print or add them after the fact.

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