Common Scams that Threaten Your Business

Posted On June 24, 2018 / Under / With

Scams and fraud are an ever-growing problem, affecting over a million people annually according to the Federal Trade Commission. In 2017, reported fraud losses for individuals totaled $905 million. But these scams aren’t limited to consumers. Your business is also a potential target. Financial losses due to fraud can be insurmountable for a small business, but it can also damage a company’s reputation and destroy the faith of clients and investors. As scammers use technology to sophisticate their methods, it pays to remain vigilant to the types of schemes out there. We list some of the most common scams and provide invaluable tips for protecting your business.


Telephone Scams

Telephone scams are a common technique used to obtain either your personal information or money. Callers can be a real person or a pre-recorded message. You may even receive a letter or fax that instructs you to initiate the call to the scammer yourself. The scammer may claim to be a telemarketer, customer, or even a vendor you actually do business with. They might try to sell you a product that does not exist, sometimes saying you’ve qualified for a free-trial or demo that soon racks up recurring fees. In another common scam, the caller claims to be a debt collector or a representative of a legitimate organization, such as the IRS or your utility company, and threatens legal action if you do not pay overdue fees.

Protect yourself: The easiest thing to do is hang up immediately if you suspect something suspicious. Also consider registering for the National Do Not Call Registry. Never provide account numbers or any other personal information over the phone; a legitimate business will not request to confirm your identity this way. Question any offer that seems too good to be true, especially if it requires an activation “fee” or advance payment. Do not give in to pressure or fear tactics; no real business will demand you pay immediately over the phone.



Phishing emails appear legitimate but trick you into providing personal or financial information. They may also contain links or attachments that download viruses onto your computer, giving hackers direct access to your company server. Phishing emails can appear very real. Hackers can “spoof” the email addresses of companies and people you know, so the fraudulent email seems to come from a legitimate contact. Fraudulent emails may include real company logos, email signatures, and links to copy-cat websites to further the charade. Some common phishing scams include asking you to verify your financial information, or pretending to be a vendor requesting payment for a fake invoice.

Protect yourself: Never provide personal or financial data via email. Watch for typos and unusual or generic language in emails. Contact the sender at a verified phone number to confirm that any suspicious requests are real before responding. If you suspect phishing, delete the email immediately; do not click on any links or download any attachments.


Overpayment Schemes

Sometimes mistakes happen. There’s a misunderstanding about what’s owed, or a customer accidentally writes a check with insufficient funds. While this alone isn’t fraud, scammers can prey on company-client trust. In this scam, you receive a check payment for more than what was billed. The customer then requests that you wire the refunded overpayment to their account. Then the original check bounces, leaving you out the money and looking at additional bank fees.

Protect yourself: Do not issue a refund until the check has cleared the bank. Consider returning checks and requesting payment in the proper amount. Be wary of requests for overpayment to be refunded urgently via wire.


Fake Checks

The overpayment scheme often uses counterfeit checks. Fake checks are not always easy to spot. They can be printed to look identical to real checks, including watermarks and other security features. The bank may not even catch it right away. When the check bounces, you’ll be responsible for paying those funds back to the bank.

Protect yourself: Do not cash a check from a person or entity you do not recognize. Even if you know the sender, beware payments you did not anticipate.  If something doesn’t seem right, contact the customer or company to confirm they truly sent the check in question. Use contact information obtained from your records or a verified website rather than what’s listed on the questionable check. You can also contact the bank to confirm validity if you suspect a counterfeit.


For additional tips or to report a scam, visit the Federal Trade Commission website here.


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