Home > Identity Theft > 5 Scams That Plague Small Businesses

Comments 0 Comments

We’ve all seen the breaking news stories about the massive data breaches involving big-box retailers such as Target and Michaels. These incidents left consumers in fear, but the companies were able to absorb the losses.

Unfortunately, small businesses don’t always have the luxury of recouping massive financial losses after a breach. In severe cases, they’re forced to shut down for good.

If you’re a small business owner, here are some scams that could hurt your business:

1. Charitable Causes

Problem: Donating to a charitable cause is a great way to pay it forward while receiving positive exposure for your company. Unfortunately, there are fraudsters who will take advantage of your generosity.

Spotting such tricksters can be difficult, according to the Federal Trade Commission:

Of course, crooks cover their tracks by picking names confusingly similar to reputable charities, so it’s hard for businesses to find out they’ve been had.

Once you hand over the check, these fraudsters are gone with the wind.

Solution: Before making a monetary contribution, take a look at this document from the FTC, which includes tips for verifying a charity’s legitimacy, and an extensive list of red flags that should raise your level of suspicion.

2. Business Directories

Problem: Some companies may offer to list your company in their business directory. Generally, this is a good thing. After all, the more promotion for your business, the better.

However, not all solicitations for advertisements are created equal, according to the FTC. In some cases, the fraudsters may demand pay later for your listing. In other cases, they will demand you pay for a directory that does not exist.

Either way, you may be hounded for hundreds of dollars and threatened with legal action if you do not pay.

Solution: Educate yourself and your staff to be on the lookout for this type of scam. Even better, designate a specific representative to handle all transactions of this sort. Never agree to any form of advertising arrangement via telephone until the fine print is scrutinized and the validity of the offer is confirmed.

3. Phishing Emails

Problem: You receive an email with an important subject line. Or perhaps you get a note from what seems to be a familiar source. Either way, you open it and start reading.

Depending on the message, you may click on a link in the body of the email. Within seconds, viruses flood your computer, capturing account information, credit and debit card numbers, Social Security numbers, and other sensitive data. This is known as phishing and poses a major threat to your organization.

Solution: Carefully inspect email messages to ensure they are from a reputable source. Grammatical errors and suspect images could indicate otherwise.

Also, confirm your anti-virus software is up to date. Making sure that you receive security alerts can help you prevent unwanted viruses from being downloaded onto your computer.

4. Office Supplies

Problem: Sometimes, supplies show up at the office door that you never ordered. In other cases, a delivery person may present you with a package that seems legitimate, but which does not actually contain the promised product. Either way, unsuspecting employees may simply pay the bill.

Solution: As with preventing directory scams, it is important to educate your staff about when to accept a delivery. Again, it is best to designate one employee who clearly understands what you have and have not ordered, and who can be on the lookout for scams.

5. Overpayment

Problem: In this scam, a customer sends the business a check considerably larger than the purchase amount and requests a prompt refund for the difference.

However, in many cases the check eventually bounces — but not until the business has already refunded the partial amount.

Solution: The best way to avoid this scam is simply to refuse to accept an overpayment.

This post originally appeared on Money Talks News.

More from Money Talks News:

 Image: Photodisc

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team