Australia's online magazine for entrepreneurs & SMEs

Scammers targeting small business

Monday, 25 February 2008

Mike Preston, economics editor

Small businesses are being targeted by sophisticated fraudsters using techniques such as false invoicing to fool victims into sending money, a new report by the national consumer watchdog reveals.

The Australian Competition and Consumer Commission yesterday released its Little Black Book of Scams, a guide aiming to alert consumers and business owners to the increasing number of scams, and provide tips on how to avoid them.

It identifies several of the most common frauds perpetrated on business:

• Advertising scam: Business is sent a bill after agreeing to what was presented as free advertising, or sold advertising in a directory that doesn’t exist or is never produced.
• Invoice scam: An invoice is sent for goods the business didn’t order, often office supplies or other marginal goods that can slip through cost controls.
• Faxback scam: A business can get free advertising or great deal if they send a fax to a premium rate number – faxes can be charged at more than $6 per minute and the scammers make sure your fax takes several minutes to get through.

These scams seek to exploit the fact that business owners are often to busy to check every invoice, ACCC deputy chair Louise Sylvan says.

“They send invoices through that are much bigger than they should be, and they just hope people will be too busy too notice,” Sylvan says. “There is a huge amount of it out there. We don’t know how much is being lost to the Australian economy, but a recent UK study found £4 billion leaving the economy there, so it’s huge.”

Fraudsters are using communication channels from post to email, and getting more sophisticated in how they frame their scams. And, Sylvan says, it is not only the elderly or hopelessly tech unsavvy getting caught – men and women are falling foul of scammers in equal numbers and it is men aged 25-44 who are trapped most often.

“The communication they send can be very authentic and can be tricky, but often they are just seductive offers for true love or wealth that people find hard to resist,” Sylvan says.

The ACCC offers three key pieces of advice to business owners to help them avoid scams:

• Don’t ever click on a link to an unsolicited email – it can download malware on to your computer without you knowing it.
• Always be cautious if someone asks for personal details.
• Be careful if putting information online – organised criminals are trolling the web for information they can use for scams.
• Before giving over details or paying any money, get information on the identity of the organisation you are giving it to and have it independently verified.