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The Association of Certified Fraud Examiners (ACFE) reports that “a typical organization loses a median of 5% of revenue each year due to fraud.” So, what is Your best protection against scammers? Learn the signs of scams that target businesses!

Here are a few of the scammer’s tactics:

1. They pretend to be someone you trust. Either a company you know or a government agency.
2. They create a sense of urgency. To rush you into making a quick decision before having time to think or do your due diligence.
3. They use intimidation and fear. That something bad is about to happen to convince you to send a payment before you have time to see the problem in writing or to check out their claims.
4. They use untraceable payment methods. Like wire transfers, re-loadable cards or gift cards which are very hard to reverse or to track.

Here’s a list of some common scams that target small business:

1. Tech Support – Starts with a call or an alarming pop-up message pretending to be from a well-known company and that there is a problem with your computer security. The goal is to either get access to your computer, your money or both. They may ask you to pay to fix a problem you don’t really have or enroll your business in a non-existent or useless computer maintenance program. They can then access sensitive data like passwords, customer records and even credit card information.
2. Fake Invoices – Scammers create phony invoices that looks like products or services your business already use (e.g. office or cleaning supplies or domain name registrations) and hope that the person who pays the bills for your company would assume that those invoices are for merchandise the company actually ordered. They believe that because the invoice is for something critical, you’ll pay first and ask questions later.
3. Un-ordered Office Supplies and Other Products – Someone calls to confirm an existing order of office supplies, verify an address or offer a free catalog or sample. If you say YES, un-ordered office supplies at your office, quickly followed by high pressure demands for payment. Remember, that according to the FTC, if you receive merchandise you didn’t order, you have a legal right to keep it.
4. Credit Card Processing and Equipment Leasing Scams – They know small businesses are looking for ways to reduce costs, so some scammers deceptively promise lower rates for processing credit card transactions or better deals on equipment leasing. Unscrupulous sales agents ask business owners to sign documents that have important information missing and others have changed terms and conditions after the document was signed. You’re dealing with a scammer if the sales person refuses to give you copies of all documents and promises to send them to you later.
5. Fake Check Scams – These happen when scammers overpay with a check and ask you to wire the extra money to a third party. They’ll explain the over-payment with a good story (they’re stuck outside of the country, they need you to cover taxes or fees, you’ll need to buy supplies etc.). By the time the bank discovers the check you deposited is a bad check, the scammer already received the money you sent and you’re responsible for re-paying the bank.
6. Utility Company Impostor Scams – They pretend to call from a gas, electric or a water company with a service interruption message to scare you into believing that a late bill must be paid immediately. The scammers will try to convince you to pay by wire transfer, gift card or re-loadable card and their scam is often carefully timed to create the greatest urgency.
7. Government Agency Impostor Scams – Scammers impersonate government agents, threatening to suspend business licenses, impose fines or take legal action if you don’t pay taxes, renew government licenses, registrations or other fees. People have been tricked into paying to receive non-existent business grants from fake government programs. Businesses have received letters, often claiming to be from the U.S. Patent and Trademark Office, warning that they’ll lose their trademarks if they don’t pay a fee immediately or that they owe money for additional registration services.
8. Business Promotion and Coaching Scams – Scammers sell bogus business coaching and internet coaching and internet promotion services using fake testimonials, videos, seminar presentations and telemarketing calls. They falsely promise amazing results and exclusive market research to people who pay their fees and may lure you in with low initial costs, only to ask for thousands of dollars later. Ultimately, the scammers leave entrepreneurs without the help they sought and thousands of dollars in debt.

How Do You Protect Your Business?

• Be Tech-Savvy: Scammers often fake caller ID information so you’ll be more likely to believe when they claim to be a government agency or a vendor you trust. They can even hack into the social media accounts of people you trust and send you messages that appear to be from friends. Secure your business’s files, passwords and financial information and for additional information about protecting your small business computer system, check out the FTC’s Small Business Computer Security Basics at FTC.gov/Small Business
• Know Who You’re Dealing With: Before doing business with a company, search the company’s name online with the term “scam” or “complaint” and read what others are saying about the company. Don’t pay for business development advice and counseling you can get it for FREE through LDCENY (Local Development Corporation of East New York) or Score.org
• Train Your Employees: Your best defense is an informed workforce. Explain to your staff how scams happen and encourage them to talk with each other if they suspect a scam. Train employees not to send passwords or sensitive information by e-mail.
• Verify Invoices and Payments: Check all invoices closely. Never pay unless you know the bill is for items that were ordered and delivered. To reduce the risk of a costly mistake, limit the number of people who are authorized to place orders and pay invoices. Also review your procedures to make sure major spending can’t be triggered by an unexpected call, e-mail or invoice. Additionally, pay attention to the method of payment someone requests. It’s highly likely it’s a scam when you’re asked to pay with wire transfer, re-loadable or gift cards.

For more Tips on protecting your business from scams visit www.FTC.gov/SmallBusiness or www.FTC.gov/Subscribe or www.FTC.gov/Scams or www.FTC.gov/Complaint and www.NAAG.org.