Entrepreneurs are being warned to look out for scammers selling fake businesses and franchises, and companies sending fraudulent invoices, as experts claim the panic caused by the downturn has sparked a rise in SME scams.
Michael Schaper, deputy chair of the Australian Competition and Consumer Commission, is chairing the national scam awareness campaign together with Victorian Small Business Commissioner Mark Brennan. Schaper says that in the last few months the ACCC has seen an increasing number of businesses and individuals fall victim to scamming operations.
He says businesses and individuals need to be vigilant in recognising when a scam is presented to them. “When times are tougher, as they are now, then it creates a climate that is right for going into business for yourself.
“You’re going to see an upswing in franchises that aren’t proven businesses that are being sold. To a lot of people a franchise is a ‘buy yourself a job’ proposition. You might see people dress up something that looks like a franchise and some of those may even be sold to people,” he says.
“We have come across people who sell what we think of as a franchise when it’s not a franchise at all.”
Schaper also warns businesses against other methods of fraud, including the invention of fake invoices.
“Another area are ‘start your own business’ opportunities. There are quite a few instances where people say ‘work from home, make $1000 a week’. It turns up to be photocopied sheets of information, and often they ask for money.”
Schaper also says that in the current economic environment some firms may send out fake demands for payments dressed as court documents. “A lot of the time most couldn’t tell the difference, so they get scared and think they should pay it.
“A surprising number of firms are being hit more than once. A lot of time businesses don’t report it; they’re embarrassed or they’re trusting of their own internal records. That’s one of the spaces that scamsters exploit, the uncertainty of business owners.”
But Schaper says there are defences against fraud, including reducing the number of people responsible for paying bills and managing accounts, so if a problem occurs there are only one or two people to question.
“Also be aware of the number and types of scams people are involved in, read up on it, and also be aware of the ACCC scam watch report,” he says.
“You’ve got to be alert, you’ve got to use a measure of gut reaction. If something doesn’t ring a bell or you don’t remember ordering something you’re being invoiced for, then chances are it may well be a rat or a scam.”