Hacking, bogus debt collection, phony orders and fake complaints among small business scams: Internet Scambusters #663
Self-employed people and small firms face potential ruin in the latest wave of business scams.
Hackers are leading the attack, driving half the small firms they hit out of business, as we report in this week's Business Snippets issue.
And even if you're not in business for yourself, use our Alert of the Week to get a free financial Self-Defense Kit.
Now, here we go...
Small Firms & Self-Employed Lose a Fortune to Business Scams
Small firms are the backbone of the American entrepreneurial economy but they face a constant threat of being devastated by business scams.
Big firms can often take a scam hit in their stride, but small businesses can be wiped out by one criminal attack.
For instance, the National Small Business Association reckons that 44% -- that's not far short of half -- have experienced a hack attack, costing them an average $9,000 at a time.
That's before taking into account the reputational damage a hacked firm suffers, and the time devoted to trying to build the business up again.
Another organization -- the National Cyber Security Alliance -- says that one in five small firms experience a hack attempt in any one year and more than half of these go out of business within six months.
Sometimes, confidential records are compromised; other times websites are accessed and tampered with. Either way the result is devastating.
This is happening at the worst possible time -- when more and more people are turning to self-employment.
If you don't run your own business, you almost certainly know someone among your family and friends who does.
As some of the biggest corporate victims show, it's virtually impossible to stop a determined hacker. But there are several actions you can take to significantly reduce the risk.
- Installing and maintaining up-to-date security software.
- Limiting employee access to confidential records.
- Banning the use of USB drives and external hard drives.
- Using complex passwords and changing them frequently. Check out this earlier issue: 10 Keys to Password Security
- Using two-factor identification for access to your systems. See our earlier report: How to Easily Enhance Your Password Security
Sadly, hacking is just one of the threats small firms face.
We've written about some of them several times previously.
Here are some new ones to be on the lookout for:
Bogus Debt Collection
Telemarketers contact firms offering to collect outstanding customer debts in return for a fee.
They collect the debt but then don't sent a cent to the company.
At the outset, victim firms are also required to sign a contract agreeing to forward any payment sent directly to them to the "debt collection agency" to deduct their fee first.
Again, the balance is never returned.
In one recent incident, 600 firms were reported to have lost around $6 million to a single "agency" before its owner was put behind bars.
Action: Beware of cold-callers offering this kind of service and always check out the reputation of any firm, debt collectors or not, that you're planning to do business with.
Phony Printer Supplies Invoice
A common small business scam that we've previously reported happens when crooks send an invoice for products they didn't supply, hoping they'll get paid without anyone noticing.
Now scammers have stepped up their game by making their payment demands seem more authentic by using the names of genuine employees and details of actual equipment on their invoices.
This has happened most recently with invoices for printer ink, paper, and other supplies.
First, the crooks contact the company pretending to be printer supplies specialists, saying they might be able to offer a good deal if the firm tells them what type of printers they have. They also ask for the name of the person they spoke to.
Then the scammers send in their invoice for supplies, naming the printer models and the person who supposedly ordered them.
If the invoice gets paid, the scammers will almost certainly send a repeat a few weeks later.
Action: Limit who can authorize and place orders, and query invoices with names on them with the individual identified.
If possible, physically inspect and maintain records of all incoming supplies.
Contractor Overpayment Scam
If you're a contractor, watch out for emails from "customers" who say they can't phone you because they're hearing impaired.
They ask for an email bid on a home repair job and then send a dud check as supposed advance payment.
Yes, this is an advance payment scam.
The "customer" then claims to have overpaid for the job and asks the contractor to refund the balance (before the bank identities the check is bogus).
Action: It's an old trick but one that still pulls in the victims.
Call the issuing bank named on the check to verify its authenticity and, as always, never wire money to someone you don't know.
Fake FTC Complaint
Emails purporting to be from the Federal Trade Commission say that a customer has filed a complaint about you.
The message contains a link or an attachment that aims to load malware onto your computer system.
Action: The FTC doesn't work this way, so don't click the links. If in doubt, contact the Commission.
Your business depends on your reputation, so what would you do if someone threatened to undermine that reputation?
That's the dilemma faced recently by a photographer who was told by a supposed "reputation management" company that it had learned that severely critical reviews were about to be posted about his service.
The fake company said it could prevent the online publication for payment of a fee.
Photographers across the U.S. have been hit by this scam, and there's no reason to think the crooks won't move on to other service providers in due course.
Action: This, of course, is a 21st century version of a protection racket and, like all extortions and blackmail, the scammers will come back for more.
So don't pay. Tell the FTC (see above) and set up a Google news alert in the name of your company so you'll be immediately alerted to any phony critiques.
Alert of the week
The U.S. government has launched a Financial Self-Defense Kit to help consumers avoid scams, protect their rights, and invest wisely. It provides several downloadable publications, a fraud video, articles on money basics, and other information about financial scams.
That's it for today -- we hope you enjoy your week!