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Scams That Target Small Businesses

Wednesday, February 1

Small Biz Scams

Consumers aren’t the only victims of fraud. Every year, thousands of small businesses find themselves targets of fraudulent or deceptive sales practices.

There are numerous scams that target small businesses—from phony invoices for unordered products or services and fake online directory advertising, to false claims of government requirement notifications with payment requests.

Small business scams are becoming more prevalent, with scammers going to great lengths to persuade businesses that the invoices they are sending or the offers for service are sincere and valid. When, in fact, it’s very easy to duplicate letterhead and logos so that they look real. It’s equally simple to create phony websites or business checks as well as acquiring your name, title, address and other business information through business listings, articles, ads, and business websites.

“We continually see various scams against small businesses and they seem to be increasing each year”, says Jim Temmer, CEO/president of the BBB Serving Wisconsin.  “BBB reminds businesses to protect themselves by learning what to look out for.  Often, it’s only a matter of identifying suspicious situations and asking the right questions.”

Some of the common small business scams include:

Phony invoices.  Businesses receive fake invoices demanding payment for product or services never ordered or received. Sometimes, phony invoices are disguised as solicitations.  Often, if you look closely, you’ll see fine print that identifies the bill as an actual solicitation for business. Generally, the amount is small enough to not initially raise a red flag.

Directory scams. A problem that has plagued businesses for decades and one BBB sees all the time involves deceptive sales for directories. Commonly, the scammer will call the business claiming they want to update the company’s information for an online directory, or the business owner will receive an “online directory” renewal notice. Scammers are counting on the fact that business owners are busy and will make these notices appear legitimate, local, or industry-targeted. Keep a list of the directories you are published in and evaluate the values of those directories on an annual basis. Check free company reports with  

Stolen identity. Here, scammers pretend to be a legitimate company for the purposes of ripping off consumers. When it comes to stolen identity, the company doesn’t necessarily lose money, but their reputation is potentially tarnished as angry customers who were ripped off by the scammers think the real company is responsible. They may set up a fake website and “hijack” your company address.

Charity pitches.  Most businesses are regularly asked to donate funds to needy causes, from requests to support the neighborhood’s latest fundraising project to appeals for sizeable charitable contributions. While many requests are legitimate, every year small businesses become victims of fraudulent or deceptive charitable solicitation schemes.  Make sure to check out the charity at

Internet & phone.  Watch out for ransomware, phishing, URL hustle and spoofing scams. Scammers play on fear, convenience and lack of technical knowledge.  BBB receives complaints each year from business owners who have been scammed out of money or important business information by people who know how to speak in business terms.

Vanity awards. “Best of” or “Who’s Who” in your industry are great recognition. Business Owners want to be sure the award is legitimate and that it isn’t just a way to pay very high prices for plaques to display in your office.

Office supply scams.  Businesses may receive an unexpected telephone call first.  Sometimes an advance call is made to find out what brand of supplies or equipment the business uses. On the return call, the caller claims to represent a reputable company with which the firm often does business. The caller may state that surplus merchandise is available at a reduced price due to a cancellation or over-order by another purchaser. Don’t be fooled.

Business opportunities.  Many small business owners are approached to invest in other business opportunities. Promoters may even claim that the venture will increase customer traffic flow into the current business or that little effort is required to collect high profits. Before jumping into business collaboration, make sure you know the value of the product and its true costs. Always make sure to check out the business at

Coupon books. Small business operators are often approached to participate in coupon book promotions. The business offers discounts or extras in the coupon books that are sold by promoters to consumers. Problems occur if the promoters change the terms of the coupons to make them more attractive to buyers, when the books are oversold or when books are primarily distributed outside the firm’s normal business area. Make sure the coupon book is being promoted by someone you trust, and that the terms and conditions are clearly spelled out.

Fax back scams. Businesses will receive an unsolicited fax, usually offering a great deal on a product or a trip. They often require that you send a fax back or call a toll-free number. Be careful. The high costs when you reply are often not disclosed, and you can be charged several dollars if you fax back.

Overpayment scams. Be extremely cautious if a customer overpays using a check or credit card and then asks you to wire transfer extra money back to them or to a third party.

Corporate identity theft. Con artists pose as an individual from a company, using a title and most of the corporate identity of the local, legitimate business. They may slightly change the legitimate business's phone number or email address (which often go unnoticed if not careful) Then, by posing as this company, they also provide credit references which are sometimes easily available on a company's website. They then send out a quote request and when an unsuspecting company responds with a quote, they generate a purchase order. Some companies do their background checks and find out quickly that it is fraud - the address, URL, email address or phone number may be slightly off. If you didn't notice, your goods are likely shipped to an address that is not the company address of the identity they’ve just stolen. Oftentimes, it was shipped to a warehouse or even an empty field. But the crooks now have your product and you are out the money. Even if the company that receives the quote request just merely respondsto the request, the crooks now have their identity/information. These crooks are trolling for fresh identities. What can you do? Double check every quote, request, email, and invoice that you receive  thoroughly. Compare it with the company’s direct website and also check with to verify correct and accurate information.


The BBB offers these tips to help small businesses protect themselves:


  • Keep good records.  Keep documentation of all orders and purchases. This will help you to detect bogus accounts and invoices.
  • Never provide personal information or financial details to anyone over the phone that you don’t know.
  • Make sure that the business billing you is a business you are familiar with and normally do business with.  If not, question it.  Get the name of the person you speak with, the company name, address, phone and website. 
  • Do not give out information about your business to anyone, unless you know what the information will be used for.
  • If solicited for a product, service or donation, always ask for an offer or for further information in writing. Be sure to have a conversation via telephone as well; do not just correspond through email or text messages.
  • Ask for references, so you may verify with other businesses what their experience is and how long they’ve been doing business with the soliciting company.
  • Set clear procedures for the verification, payment and management of all accounts and invoices. Limit the number of employees that are authorized to place orders or pay invoices.
  • Install computer protection software and a firewall.
  • Don’t click on links inside unsolicited e-mails.  They could spread malicious software or viruses.


Check company reports for free at  If you feel you have been scammed, report the scam to local law enforcement and report it to BBB Scam Tracker. Let others in your industry know of the scheme you’ve come across.

Original article from Better Business Bureau here.