Attention, small-business owners. Take this as a given: A growing army of ripoff artists is out to steal your profits. They are very creative in devising ways to do it and very, very slick in pulling it off.
Startup companies are special favorites of these ripoff artists. Their success costs small businesses billions of dollars each year. No one knows the exact cost, in part because companies that get taken are too embarrassed to admit it.
Sometimes the marks don’t even know they’ve been had. Many con artists do their dirty work, disappear and pop up again somewhere else. Your best defense is vigilance, and that begins with knowing what to watch out for.
– Phony invoices. A few weeks after Applied Environmental Inc. ran a help-wanted ad in the Washington Post, the Reston, Va., consulting firm received a page from a different newspaper showing the ad, along with an invoice for $233.45. But the company hadn’t bought an ad in the second paper.
The bogus invoice is the hottest scheme targeting small businesses these days. It failed in this case because the rules at Applied Environmental require that every purchase be preapproved and each invoice bear a purchase order or a specific contract reference. This invoice had neither.
The variations on this scheme are endless, and the invoices look authentic. Phony bills for Yellow Pages ads often bear the walking-fingers logo, for example, and some wheeler-dealers use the names of local charities and universities.
Disorganized businesses are sitting ducks. For easy pickings, scamsters scour state records to spot new companies in the throes of startup. Your best hope for foiling this type of scam is to train your employees to follow carefully defined purchasing and paying procedures to the letter.
– Toner phoners. Waterfield Financial Corp., a mortgage banker in Baltimore, lost more than $4,500 to a “toner phoner” before it caught on. Toner phoners are ripoff artists who call with a spiel claiming they represent your copier or fax-machine manufacturer or some other supplier-and, oh, what a deal they have for you.
Once again, they prey on poor organization and trusting employees. Waterfield’s office manager, Deborah Decker, says a caller told the receptionist he worked in the main office and had a supply of toner for the branches.
Then he matter-of-factly asked for the serial number of the firm’s copier. He later used the number as authorization to begin shipping boxes of toner. Then came the bills, for two to three times the normal amount. When Decker began investigating, she discovered that although the cartons were official-looking, the toner bottles were not. Using the stuff was risky.
The best way to protect your business from this ripoff is to make sure you know your suppliers and their salespeople. Make it office policy that any telephone soliciation from someone offering toner or any other supplies be handled by taking the caller’s name, company and phone number and calling back to verify the legitimacy of the company.
– Long-distance break-ins. The fastest-growing type of toll-call fraud makes a company’s own telephone operators unwitting participants.
Here’s a scam that burned members of the Arkansas Hospital Association: A con artist calls a hospital and asks for a particular department. Then, when he’s connected, he says he has reached the wrong office and asks to be transferred back to the operator.
To the operator, the call now appears to have originated inside the hospital, so a request for an outside line doesn’t seem out of the ordinary. This allows the perpetrator to make a long-distance call at the hospital’s expense.
A couple of long-distance calls won’t bust a business, but toll fraud is no penny-ante racket. For most companies hit by phone fraud, one estimate puts the average cost at around $25,000.
The most costly frauds involving large numbers of long-distance calls exploit the advanced technologies that businesses depend on, including 800 numbers and voice mail.
These telephone thieves use personal computers, software designed to discover passwords and random-number dialers to break into a system in search of an outside line. Then they sell calls, especially international ones, on your line from pay phones or boiler room setups.
One thing you can do to protect your business is avoid leaving a message on voice mail that says you will be gone for an extended period. This is music to the ears of toll-call flim-flam artists, especially during the holidays, when many of the people to whom they sell calling time want to make calls abroad.
For a free booklet, “Tips on Safeguarding Your Company’s Telecom Network,” produced by AT&T, call 800-638-7233, ext. 1.
– Prize deal come-ons. Roland Boysen, a certified public accountant in San Antonio, knew right away he’d been had when the promotional pens arrived. The $299 he had paid was at least five times what the pens emblazoned with his name and address were worth.
It all started with a telephone call from a company offering vouchers for six airline tickets to Hawaii, Mexico or the Bahamas as a bonus if Boysen ordered a few hundred pens.
What a deal! But after he bought, the CPA discovered the catch: To use the vouchers, he had to stay a minimum of five nights at one of several specified hotels. Cost: anywhere from $80 to $160 per person per night. He has never used a single voucher.
The lesson here is that if you ever want to imprint some baseball caps or pens or key rings or T-shirts with your company’s name and logo, find someone local to make them for you or work through a familiar supplier. Know exactly what you’re getting before you buy.
Some scamsters phone posing as Internal Revenue Service agents and claim to be auditing your business. They request personal and business information. Don’t give it out. The IRS never notifies taxpayers about audits by telephone, only by mail.
Also, never make a check payable to “IRS.” Always write out the words “Internal Revenue Service.” Scamsters can easily change “IRS” to “Mrs.” and fill in a name.
Not surprisingly, companies that buy into one scam wind up on “sucker lists” that are bought and sold in the trade. This can lead to a wave of assaults on your company.
Whatever the scam, vigilance is the best defense. For a free brochure, “Scams, Schemes and Deceptive Offers: How Small Businesses Can Survive the Great American Ripoffs,” send a self-addressed stamped envelope to Call for Action, 3400 Idaho Ave., N.W., Suite 101, Washington, D.C. 20016.
