4 Scams Small Businesses Need to Stay Alert To

It isn’t just individual people who are targeted by scammers. Many fraudsters find it worthwhile to go after business owners and entrepreneurs, as well. If you run your own business, it can help to learn about the different creative ways in which scammers go after business owners. You can educate your staff about them, and help your company stay safe. What follows are examples of the kinds of scams that business owners are frequently targeted with.

Compliance scams

In compliance scams, owners of new businesses receive mail that informs them that there are payments to make to remain in compliance with the law. You may be asked to pay something under $100 for a labor law poster at your place of business to declare your compliance — you may be informed that you could face penalties of thousands of dollars if you don’t pay and put up the poster. The truth is, however, that if yours is a business that employs workers, the Department of Labor provides compliance posters for free.

A related scam targets newly registered businesses. A letter arrives in the mail to tell you that you need to pay $50 or so for an elective certificate of status and corporate agreement template. In reality, however, you can get the forms for these purposes for free from the secretary of state for the state in which you do business.

In a different version, the scam targets business owners who search on the internet for a way to get their employer ID number. Websites that appear to be associated with the IRS show up in the search results, offer to help you complete the SS-4 form to get your employer ID number and ask for payment. You might be led to believe that it’s the IRS that your payment goes to, when, in fact, it’s the third-party website that charges you the money.

The idea to keep in mind is this: When you receive information about having to pay money for anything to do with complying with the law, you need to become alert to the possibility that it is the scam. Complying with federal government regulations, in most cases, requires no payment. While state governments do charge for forms and other requirements of compliance, they are usually upfront about it.

The vanity award scam

Some scammers target business owners by appealing to their vanity. They inform them that they have been selected for an award by a prestigious publication, but tell them that there will be charges to pay to order copies for friends and family. If you receive information about an award, but if there is payment of money involved, you should probably stay away. At the very least, you should research the organization that is offering you the award, to check to see if it is legitimate.

The false invoice scam

Businesses usually pay dozens of invoices from suppliers and service providers each month. Accountants in charge of paying invoices sometimes don’t keep track of what different invoices are for. Scammers know this and send in fake invoices from fictitious companies. They hope that the accountants who see these invoices won’t realize that they are fake, and simply send checks out to the addresses listed. Sometimes, scammers even put in research to find out what suppliers a company deals with and send in fake invoices to look like they are from those suppliers. It’s important for businesses to match invoices against records of orders actually placed.

The fake utility bill scam

Businesses depend on phone service, internet connectivity, and electricity, to function. When they receive notices from the providers of these utilities threatening to disconnect service if bills aren’t paid, they may panic, and quickly pay whatever is demanded. This is the reaction that scammers hope for. They send out fake bills, threaten disconnection, list payment information that routes payments made to their own accounts, and receive money that these companies may pay to avoid utility disconnection.

It can help to simply realize that scammers target businesses with various schemes. When you’re aware that fraudulent practices exist, you’re likely to be careful about demands for payment of every kind. Alertness is all it takes to make sure that you don’t fall for the schemes that tricksters may think of.

Print Friendly, PDF & Email