Business Scams #2: 7 More Tricks to Snag Your Money and Data

A new roundup of less familiar business scams, and variations of well-established ones — and what you can do to avoid them: Internet ScamBusters #298

Today we take a second wide-ranging look at business scams. Some, like phony loan schemes and bogus invoices, are after your money.

Others are more sinister, aiming to compromise your security and maybe even steal money and data from your customers.

In total, we have seven business scams to tell you about, with some useful advice on how to spot them and avoid them.

But first, we highly recommend you check out this week’s issue of Scamlines — What’s New in Scams?


Business Scams #2: 7 More Tricks to Snag Your Money and Data


With more than 22 million sole practitioners and small firms in the US and proportionately large numbers in other countries, business scams are, well, big business.

Most weeks, in our Scamlines roundup of the latest scam news headlines, at least a couple will be business scams — where unsuspecting firms are conned out of hundreds or thousands of dollars.

Retailers are a particular target of business scams and you can read our special report covering some of the most common business scams in Scambusters #290.

In addition, many of the tricks played on private individuals often also reappear as business scams, like phishing and forged checks.

And, as we know, the crooks don’t stand still. They’re constantly dreaming up new scams and variations of well-established ones. So, for this week’s Scambusters offering, we’ve pulled together a list of 7 current business scams to watch out for (in addition to the retail tricks referred to above).

1. Cheap or Bail-out Business Loans

If you run a business and you’ve never had to borrow money to support it, count yourself lucky. These days, with the economy under pressure, many struggling firms are lured into loan deals that simply don’t make sense.

Clutching at straws, some business owners can’t believe their luck when they find an online lender or loan-arranger apparently prepared to help them out — sometimes even with remarkably low interest rates and repayments.

If it’s a business scam, the catch will be a request for advance fees, usually the first couple of months’ payments, an arrangement fee or some kind of phony insurance — and sometimes all three.

The loan, of course, never arrives and the “lender” disappears with your advance payments.

This trick, the advanced fee loan scam, has beenamong the top scams since we first wrote about it back in 1998, though it’s booming right now because so many firms need a cash bail-out.

Action: All three types of advance payment may be legitimate — though highly unusual. As in all cases where you’re asked to hand over money to someone you don’t know, check them out independently. Contact the local Chamber of Commerce and business license issuers.

2. Health and Safety Breaches

This type of business scam shows up regularly in our Scamlines roundups. There are a number of variations but the main trick is where firms receive a visit or phone call supposedly from the county or state health department.

The caller may say the department has previously contacted you without response about non-display of mandatory public or employee notices. Or they may simply say your posters are out of date.

One or both of two things happen next: You receive an on-the-spot “fine” which you have to pay in cash (face-to-face) or credit card (phone); and/or you’re required to buy up to date posters. In both cases, these are scams.

Another variation is a supposed restaurant or kitchen inspection where the owner again receives an on-the-spot “fine.”

Action: Health departments don’t operate this way. There’s no such thing as an instantly payable fine. And legal posters are usually available from them free of charge.

3. Hijacking Your Website

One of the most alarming business scams happens when hackers invade your company website and use it as a staging post for another scam. This might involve turning it into a “zombie” — sending out spam — or collecting details about customers.

Scammers can even redirect customers to other websites, upload virus programs or other malware onto their computers, or simply use your server as a storage area for data connected with their crooked activities.

They usually gain control of your website by logging on with an authorized username and password. That means either you gave these away — for example by unknowingly downloading a key-logging program — or you made them relatively easy to guess.

In fact, it’s very important that you keep your website very secure, even if it is “just information.” Since scammers know your security may be lax, they will try to quietly break into your site and install a new trojan toolkit that will infect the PCs of unaware visitors to your trusted website.

Action: Whether you host your own website or use someone else’s service, you need a strong password that you change frequently. See this article on Creating Computer Passwords for guidance.

If it’s your own server, you need commercial strength security software and frequent testing. If it’s externally hosted, satisfy yourself about the security the provider uses.

4. Poor Quality Supplies

Firms switch to a new supplier for apparently branded or high quality items, either for their own use or for resale.

The scammers offer the articles at a significantly discounted price, but they turn out to be inferior, sometimes cheap knock-offs of the originals.

This is increasingly common with items originating in China and Hong Kong, even if the order is placed with a US supplier.

The scammers hope the order will not be quality checked. If it is, and the shortcoming identified, they may protest ignorance or even disappear.

Action: The old adage applies here: If it seems too good to be true, it probably is. Order from reputable suppliers and always quality check goods received.

5. Bogus Invoices

We covered bogus invoice scams in our issue #280.

Businesses receive bills for items they haven’t ordered, that may or may not be delivered. The scammers hope the bill will slip through the net and get paid without the order being checked.

In a recent variation, scammers turn up at stores or offices when they know the owner or manager is away, with an invoice for a directory advertisement (see below) and demand immediate payment. If the employee is senior enough, he may hand over the payment.

Action: Use an order number system and check all invoices against them. Don’t permit employees to pay on demand.

6. Phony Advertising or Sponsorship Deals

In this business scam, firms are invited to advertise in special publications, like one-off magazines, phone directories, calendars, even restaurant table placemats.

They’re asked to pay upfront. The item is then either not published or it’s a poor-quality job with limited or non-existent distribution.

An increasingly common variation is a request for sponsorship or participation in an event such as a public fair or exhibition. You might be asked to support some kind of fundraiser or take a booth at a trade show, which turn out to be bogus.

Action: Always check out the track record of the promoter. You need authentic evidence of previous successes. If that’s not available but you think the offer is genuine, pay only a deposit and check the credentials of the individual.

7. Fuel Tax Refund

This business scam mainly targets Canadian trucking companies operating cross-border into the US. With fuel prices at or near historic highs, scammers find them easy prey.

It works like this: Claiming to be tax accounting specialists, the scammers tell truckers they can help reclaim taxes paid on fuel bought in the US. They say it’s a no-risk deal as they take commission only from rebates.

They then make a fraudulent claim to the IRS using a refund scheme intended for US farmers. The IRS pays first then checks later.

By this time, the scammers have taken their commission and the trucker is ordered to repay the full sum by the IRS. They may also prosecute for fraud.

Action: Simply know that no such refund is available.

These are just a handful of the many tricks hackers and con artists will use to carry out their business scams. No doubt they are planning more, as we write this newsletter. But you can take comfort that when they do, we’ve got our eyes open for them — and we’ll let you know!

That’s all we have for today, but we’ll be back next week with another issue. See you then!