What you need to know about small business scams

A recent PayPal commissioned global report revealed that Australians are the most fearful people in the world when it comes to identity theft and fraud – an unsurprising statistic considering the sheer number of scams that seem to be circulating these days. You can protect yourself and your business by being aware of the common scams targeting small businesses.

False billing scams

The most reported of small business scams, false billing scams often manifest themselves in the form of subscription forms disguised as an outstanding invoice or a “renewal notice” that get businesses to sign up for unwanted ongoing advertising services or unauthorized listings in magazines, journals, business registries or a directory.

Scammers often falsely claim that the publication or directory is well-known and has a high readership, and the offer may sound like a “free” entry but charges can be hidden in the fine print, resulting in demands for payment later.

Warning signs are:

  • You receive a call or invoice from a business directory or publication you’ve never heard of, confirming your entry or advertisement.
  • The caller claims that the government requires you to be listed in their register.
  • The caller reads out your listing or advertisement and you recognize it as a listing you put in a different publication.

Tips to protect you from false billing scams are:

  •  Ensure the business billing you is the one you normally deal with.
  • Always check that the entry or advertisement was both ordered and delivered before paying an invoice.
  • Be aware that a scammer may quote a genuine entry or advertisement you placed in a different publication or directory to convince you to pay.
  • Never give out or clarify any information about your business unless you know what the information will be used for.
  • If you receive an offer for a free trial, check for any hidden terms.
  • Try to avoid having a large number of people authorized to make orders or pay invoices.
  • Never agree to any business proposal on the phone, always ask for an offer in writing.
  • If you are unsure about any part of a business offer, ask for more information or seek independent advice.

Phishing refund scams

A phishing email that claims that the recipient is entitled to a “tax refund” is currently circulating and states that recipients should click on the embedded link or open an attachment to complete an online form to receive the refund. These emails can differ in their appearance and level of sophistication, but key indicators of this scam are:

  • The email asks you to provide personal details (you should always be suspicious of this)
  • It is poorly worded with spelling and grammatical mistakes (though this is not always the case)
  • Includes an attachment form or link to a webpage to lodge a form
  • Comes from an email address which is not a valid ATO email address
  • Asks for credit card and PIN numbers.

How to deal with phishing emails:

  • Do not click on the link in the email, as it will open a fake webpage that will attempt to obtain your tax file number
  • Do not open any attachments, as they are often infected with a virus or contain a malicious program
  • Delete them immediately, as the ATO will never email you asking for personal details
  • Only access the ATO’s online services by typing directly into your browser.

Yellow Pages directory fax scams

In early August, the Australian Competition and Consumer Commission (ACCC) warned small businesses to watch out for fraudulent faxes claiming to be from Yellow Pages Australia and Open Business Directory.

Key indicators of this scam are:

  • These faxes appear to be seeking confirmation of contact details for their business. On closer inspection however, the fax is in fact an agreement to sign up to an online business directory service charged at $99 per month for a minimum two-year period.
  • They contain an invoice due date, and scammers may soon start hassling businesses for payments or threatening them with late payment fees, legal action or debt collection.

How to deal with fraudulent faxes:

  • Bin them as Senses will never approach you this way.
  • Ignore and report any threatening phone calls, emails or faxes demanding payment.
  • Spread the word and ensure your employees are aware of this scam and know how to protect your business.

Over payment scams

This involves scammers making contact to purchase goods and services from you, and then sending you a payment by cheque, money order or credit card for far more than the agreed price. The scammer then asks you to refund the over payment or to pay the scammer’s “freight company”.

The scammer is hoping you will transfer the refund or pay for “freight” before you discover that their cheque has bounced or that their money order or credit cards were phony.

Businesses may end up losing money, as well as the item they were selling if they had already sent it to the scammer. Common products that over payment scammers target include used cars or boats, and electronic items such as smart phones, tablet devices and laptops.

How to detect over payment scams:

  • Be suspicious if you are overpaid for products.
  • Be wary of complicated or unlikely orders.

Investment scheme scams

This scam usually involves telemarketing campaigns peddled as tax-free opportunities, which often turn out to be sports betting schemes or betting software offers in disguise and are nothing more than gambling.

  • Watch out for unsolicited offers with keywords such as “tax-free wealth”, “strategic investment”, “investment not gambling” or “recession proof” – these schemes are not investment opportunities.

Domain name scams

Under this scam, you’ll be sent either an unsolicited invoice or email for an internet domain name registration very similar to your own business domain name or a renewal notice for your actual domain name. If you have a registered domain name and receive a renewal notice, check that it:

  • Matches your current domain name exactly – look for small differences such as “com.au” instead of “net.au”. Remember, even if the core business name is the same, it could be a completely new domain name.
  • Comes from the company you originally registered your domain name – check for the actual expiry date for your existing domain name to confirm if it is really due for renewal.

Office supply scams

These scams often involve products or services that businesses regularly order such as

stationery and cleaning supplies. Scammers typically call businesses pretending that the service or product has already been ordered and will pretend to be a business’s “regular” supplier – telling them that the offer is “special” or is available for a limited time.

  • Ask for proof if the caller claims that your business has ordered or authorized something and you do not think it sounds right. Check that goods have actually been ordered and delivered before paying an invoice.

Email intercept scam

Under this scam, the scammer gains access to your supplier’s email account and intercepts emails going from you to the supplier and vice versa. Using this technique, the scammer is able to send you a deposit invoice and change the bank account details – causing you to make the money transfer to the incorrect account.

  • If you notice a supplier’s usual bank account details have changed, call them to confirm.

Ransomware scam

Akin to an extortion scheme whereby scammers hijack your computer files and then demand a ransom so you can have them back, ransom ware scams sometimes involve users finding that their computer has been frozen. Scammers have used pop-up alerts that claim to be from the Australian Federal Police saying that the computer has been locked because a business has visited an illegal website or breached various laws. The scammer claims that they will unlock the computer if a fee is paid.

In order to protect yourself from a ransom ware attack,

  • Ensure your computer has a firewall and up-to-date anti-virus and anti-spyware software.
  • Use a pop-up blocker as a lot of ransom ware is delivered via pop-up alerts.
  • Back-up your personal computer files and system files regularly.

Fax back scams

Scammers fax businesses an offer that requires one to accept by sending a fax back to a premium rate number (starting with “19”) to accept. The scammers make sure that it takes several minutes to process the fax, resulting in a hefty phone bill.

Scams succeed because they look authentic and prey on time-poor small business owners. Protect yourself and your business by being aware of the common tricks employed by scammers.

Important information
This document has been prepared by Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138, (Financial Wisdom) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Financial Wisdom advisers are authorized representatives of Financial Wisdom. Information in this document is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Financial Wisdom, its related entities, agents and employees for any loss arising from reliance on this document. This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.