Top 10 small business scams

Small businesses are often targeted by scams on the assumption that they are keen to exploit opportunities that will make them money, as well as their image of not being as professional or savvy as large companies.


This perception is clearly unfair but, in order to help you avoid becoming a scam victim, StartupSmart has outlined 10 of the most common cons to watch out for.


1 Fake government grants


For a start-up business keen to secure funding, being approached by a government agency offering a grant would seem too good to be true. That’s because in many cases, it is. The ACCC has issued a warning about the fictitious ‘Australian Government Grants Department’ which typically cold-calls or emails targets, requesting that they pay $199 to release the grant funds. Government grants aren’t just doled out like this, as businesses that have been through the torturous application process will wryly note.


2 Green scams


Businesses face an increasing onus to ‘greenproof’ their operations, not only to project a positive, environmentally-friendly brand image, but also to save money. Energy efficiency cuts bills and there are several government rebates available as incentives. However, scammers have attempted to take advantage of this by offering fake rebates, and even useless ‘energy saving’ plug-in devices, to consumers and businesses. Don’t be fooled.


3 Tax and bank fee refunds


Tax refunds are always a joy and banks sometimes overcharge you. But neither the tax office nor your bank will email you about money owed to you and they certainly won’t ask you for your bank details up front. Tax and bank fee refund scammers will try and get your personal details and ultimately your money by falsely claiming that you are owed a refund.


4 Smartphone download scam


The widespread prevalence of smartphones, especially in business circles, has led to a new form of identity theft. Computer scam tactics such as ‘phishing’ are fairly well known but the emergence of downloadable content onto phones has left people vulnerable to scammers. Malicious spyware, in the form of a game or other app, is promoted to users, who then download it. The malware then proceeds to harvest information from the smartphone, such as financial details.


5 Investment and real estate seminars


Let’s be clear – not all investment or real estate seminars are scams. Far from it. However, be wary of seminars where you are asked to invest large sums of money into high-risk strategies, particularly where the presenters try to pressure you into a deal without you getting third party advice. Seminars offering financial advice are extremely helpful for start-ups, but be careful as soon as a pitch is made for you to part with your cash.


6 False invoices


If you receive a call or invoice demanding that you pay for an advert you’ve placed in a publication you’ve never heard of, chances are that you aren’t suffering from short-term memory loss – it’s a scam. A common tactic scammers use when targeting small businesses is to extort money for directory listings or newspaper, magazine and online ads, where no such publication or advertisement exists. If you get a call from a publication that’s unknown to you, be on your guard.


7 Over-payment scam


Smart start-ups build close relationships with valued customers to ensure repeat custom. The pay-off for customers is trust. But even loyal customers can indulge in scams, such as the classic ‘over-pay’ trick. A customer will send a cheque for an amount more than the quoted price for your goods. It’s only after you’ve refunded the difference to them in cash that you realise the initial cheque has bounced and you are out of pocket – as well as stock.


8 Credit card scams


Credit card scams can come in many forms, but start-ups need to be aware of all the tricks in the book, especially if they are relying on credit cards to provide an early financial leg-up. A scammer could steal or trick you into revealing your card details or PIN number. This can be done physically, via an email or even through auto-complete software that scammers can access.


9 Work from home scam


Working from home can be a profitable, low-overhead path into becoming your own boss. However, beware firms that offer home-based jobs such as stuffing envelopes or assembling products. Once you’ve paid the scammer for the tools of your task, you are left high and dry by the con artist. Other home work scams require you to participate in anything from money laundering to pyramid schemes.


10 Money transfer con


If a stranger asks you to transfer money from them, it is almost certainly a scam. The con usually involves promises of a commission, typically 15%, for receiving money into your bank account and then transferring it out again. The Nigerian letter scam is probably the most common example of these scams, which are merely a crude way of gaining your bank account details. If you somehow fall for this, deliver a swift kick to yourself and immediately make a shame-faced call to your bank to explain.


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