Key Podcast Highlights
What Are Five Scams Every Small Business Should Look Out For?
1. Business email compromise: For this scam, the scammer poses as a vendor or other trusted source and they email the accountant or the CFO. They ask them to wire money or buy gift cards or send personal information often for a plausible reason. And then if the money is sent, it goes into an account that’s controlled by the bad actor.
2. Phony invoices: For this scam, your business receives a fake invoice demanding payment for products or services that were never ordered. Generally, the amount is small enough that it just doesn’t raise a red flag. For instance, say you get a bill for $30 for your website domain and you don’t have the time to look into it, so you just pay it without questioning it.
3. Office supply scams: With this scam, your business receives an unexpected telephone call from someone claiming to represent a reputable company that you do business with. Then the scammer will try to sell the business surplus merchandise at reduced prices.
4. Vanity award scams: This is where a company calls you and gives you an award. They often direct you to their website to claim the prize. On the website they’ll likely have you pay a fee that’s often hundreds of dollars to participate.
5. Overpayment scam: For this scam, they send you a check for more than the amount that you owe. Then they call you and tell you that you overpaid the invoice. They ask if you can wire the overpayment to an account or send a check. So, by the time you deposit the check, it doesn’t clear. But meanwhile you’ve already sent them your own check for the overage that never really existed in the first place.
Transcript
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Gene (00:02):
Hey everybody, and welcome to The Hartford’s Small Biz Ahead podcast. My name is Gene Marks and thank you so much for joining me this week. Hey, let’s talk about some scams that can impact your small business. The Better Business Bureau published their list of the top 10 scams targeting small businesses this year. We didn’t have time to go through all 10 of them, but I wanted to at least give you five scams for you to really be keeping an eye out for and some thoughts on what to do about them. Okay? The first has to do with business email compromise, right? According to the Better Business Bureau, in this case, the scammer poses as a vendor or other trusted source and they email the accountant or the CFO. They ask them to wire money or buy gift cards or send personal information often for a plausible reason.
Gene (00:52):
And then if the money is sent, it goes into an account that’s controlled by the bad actor. It’s just a fee… email request that is dubious and wrong. When you get an email request from anybody asking for money, a couple thoughts here. First of all, you don’t know this person or it’s an unusual kind of request. Make sure not only do you exchange emails back, but you might wanna call that person directly and talk to them and ask them, there’s a world of scams and deep fakes and AI generated things that can really take advantage of you. So, call the person first, okay? Before you release any money. That’s my best advice for you there. Another scam is phony invoices. Hear about this one, your business receives a fake invoice demanding payment for products or services that were never ordered or received. The most common scams according to the Better Business Bureau, or like for office supplies or website or domain hosting services or directory listings.
Gene (01:55):
If you look closely, you’ll often see in the fine print that identifies the bill as a solicitation, but generally, the amount is small enough that it just doesn’t raise a red flag. I mean, come on, this happens to us a lot. You get a bill for, $30 for some website domain and you’re like, I don’t have the time to look into this. Let’s just pay it. And a lot of times that it’s scams. It is a scam. $30 is $30, 50 bucks is 50 bucks. I mean, you wanna be more diligent when you get invoices from any source that you’re not familiar with. Again, what does it cost? How much time does it take to respond back to give that person a call? It can save you money. And listen, if you found 30 bucks lying in the street, you’d pick it up and stick it in your pocket, right?
Gene (02:34):
So, just because somebody’s asking for $30, that seems like a relatively low amount of money, that doesn’t mean that you shouldn’t be having the same amount of due diligence that you would have on anything else. All right, want some more? Okay, I’ve got some more. The Better Business Bureau talks about office supply scams. How about this one? The businesses receive an unexpected telephone call from someone claiming to represent a reputable company for which the firm does business, right? Sometimes the scammers will even call in advance to find out what brand of supplies or equipment the business has. So they do their reconnaissance in advance. Then the scam caller will try to sell the business surplus merchandise at reduced prices. So again, let me explain what this means. Somebody calls your business on an off hour. Who do you use for your office supplies?
Gene (03:21):
Oh well we use this company, ABC company for office supplies. Okay, thank you. We’re office equipment. Then a week goes by, they call back in the day, they get a hold of the accounting manager control and say, “hi, it’s Jim Smith from ABC office supplies,” which they do business with. We’ve just come across a great deal. It’s a piece of equipment for your office or a creative paper that you could probably use and we’re trying to unload it for a discount price. What do you think? The person’s like, “oh, wow, that does sound like a great deal. We’ve done business with them before. Send me an invoice.” They send a fake invoice and you make a payment to a fake account. That’s what the office supply scam is.
Gene (03:59):
Be very careful about that. People can be pretty crafty when they come up with these phone calls. Two other scams that I thought were quite interesting. You ever get a call for a vanity award? That’s where like a company calls you up and they say, “hey, congratulations. You are the best company, providing this service in the state of Nebraska. Good for you. Go to our website and you can claim this prize.” But of course, when they get there, or we’re gonna list you and we’re gonna give you an award and a plaque or whatever. But to participate, you have to pay a fee, sometimes in the hundreds of dollars. So some people fall for it. I mean, you’re like, oh my gosh, this is exciting. Our business has never won an award before, so we’re happy to be singled out this way.
Gene (04:46):
And then they pay the $200 administrative fee for the award. And the award is fake and bogus and the company is as well. So, watch out for those vanity award scams. The last scam that I thought was really interesting is an overpayment scam, right? So here’s what they tell you to do. They send you a check for more than the amount that they owe you. Then they call you and they’re like, “hey, we overpaid our invoice to you.” And again, I’m assuming they do some reconnaissance in advance to find out the names of some of your customers. But anyway, we’ve overpaid you. So can you please just send the overpayment, wire the money to this account or send us this check? So by the time you go to deposit the check, the check doesn’t clear.
Gene (05:37):
It’s a bad check. But meanwhile, you’ve turned around and you’ve sent your own check to the person for the overage that never really existed in the first place, or you wired them the money and you’re out of pocket for that amount of money. So, it’s not funny. I know I’m kind of like chuckling a little bit. I mean, you gotta admit some people were pretty devious, aren’t they? Anyway, those are the five of the top scams that the Better Business Bureau found. I mean, if you wanna learn more, you can always Google the Better Business Bureau and get the full 10. But let me recap. One is straight email compromise. People trying to fool you out of your money by sending you emails, claiming they’re somebody that they’re not. Number two is sending you phony invoices for worker products that were never done.
Gene (06:19):
Number three is an office supply scam. Somebody impersonating an office or equipment dealer saying that you’re doing business with and saying they’ve got a great deal for you. Just send us the money and we’ll send you whatever the fake deal is. Number four is Vanity Awards that don’t really, aren’t really awards, but you’ve been awarded one, except it comes with a couple hundred dollar admin or processing fee. That’s a scam. And finally, the scam is for overpayment. Somebody impersonates one of your customers and says, “hey, we overpaid you on an invoice by $200. Can you please send the overpayment back to us and send it to… wire it to this address?” And when that happens, they take the overpayment and walk away. So that’s another scam that is out there that just be aware…
Gene (07:08):
These things do exist. All right? Be careful out there folks. Ask questions. Trust but verify. Make sure that you call people back if you’re not sure and just use some common sense and hopefully you’ll be okay when these scams are… or anybody tries to perpetrate these scams on you. My name is Gene Marks, and you’ve been listening to this week’s episode of The Hartford Small Biz Ahead podcast. Hope you got some good information out of it. If you’d like any advice or tips or help in running your business, please visit us at SmallBizAhead.com or SBA.TheHartford.com. Again, my name is Gene Marks. Thanks for joining. We’ll be back to you next week with some more advice to help you run your business. Take care.
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