7 Scams that Target Small BusinessesLearn how to protect your business from these common and costly cons.
It’s not just the elderly who are targets of scammers. Increasingly, con artists have their beady eyes on small businesses, too. So owners need to be on the lookout — and train their employees to do so also.
Be on alert for — and educate your staff about — these seven scams in particular.
We’ll shut off your power if you don’t pay
Top Shelf Sports Bar and Grill in Plant City, Florida, recently received a call from someone claiming to be a rep from the electricity company, recalled owner Zee Brown. The person said she needed to pay an outstanding balance in order for the electricity to stay on or someone would come out to shut down her service.
“They heightened the situation by saying, ‘How embarrassing if your lights got cut off in the middle of customers,’” said Brown.
But Brown didn’t bite. She knew the utility company wouldn’t call directly for payment and wouldn’t try to intimidate her to get the money. “We foiled the scam,” she said.
“Certificate of Good Standing” rip-off
Be wary of scams that prey on newly formed entities, warned Abigail Salisbury, an attorney with Salisbury Legal in Pittsburgh, Pennsylvania, who specializes in small businesses.
“For instance, when I set up an LLC for a client, it is a given they will receive a postcard telling them they have to pay for a ‘certificate of good standing’ or other non-existent registrations. I assume the scammers figure that new business owners will not know any better.”
The mailings ask for several hundred dollars for these certificates, said Salisbury, who believes owners can easily fall for this scam. “There is so much to do when starting a small business that it could seem like yet another task for the checklist.”
But don’t assume all requests for paperwork are scams. “Because of this scam, I have people contacting me thinking the Department of Labor’s requirements for minimum wage signage and other real things were scams, and those are very important and very real requirements.”
Your Google My Business profile is “incomplete”
Local SEO is critical for small retail and restaurant businesses, and that includes having an accurate and optimized Google My Business profile. A relatively new scam looks to exploit this need, said David Roch, product manager at MarketGoo in Madrid, Spain, which helps small businesses optimize their websites.
It works like this: Owners get a call from someone saying he works for Google. The scammer claims the business’ Google My Business or Google+ profile is incomplete and that he can finish the job and put them on the first page of search results. He may ask for passwords and verification codes and charge anything from $100 in “service initiation fees” to $300 to $400 for “packages.”
“While Google does reach out to businesses to verify contact details or confirm details for Google Maps, they will only ask for information related to a business listing — an exchange of money is not involved,” stressed Roch. “If you get a prerecorded call or a sales rep trying to charge for inclusion in Google My Business, or if they offer to improve your search ranking or manage your online profile, hang up. Remember to never provide sensitive information about your account.”
Last year, phishing campaigns targeted small businesses 43 percent of the time according to Symantec’s 2016 Internet Security Threat Report. That’s up from 18 percent in 2011.
In phishing scams, scammers send emails or texts that appear to come from a legitimate business or organization. They are designed to collect information that will help them access your private accounts. Phishing emails may contain links to a fake website that looks just like a legitimate company’s site.
You need to verify your listing in a (fake) directory
According to the Federal Trade Commission, in this scam, con artists call a business and claim they need to verify or confirm the company’s contact info for its listing in a (fake) business directory. An unsuspecting employee agrees, and threatening scammers subsequently send urgent invoices for hundreds of dollars.
The charity con
Crooks know many businesses support community groups (Scouts, firefighters, veterans, police, etc.) and charity organizations, so they pose as a local charity to collect donations. They often pick names similar to those of reputable charities, so verify that the group exists before opening the checkbook.
“Your URL’s about to expire”
Small businesses may receive a letter saying their web address will expire shortly if they don’t pay immediately to renew their registration. In reality, the invoice comes from a made-up entity, and the owner just threw away money for “www.gotconned.com.”