The Players

The problem is, the tricks often come fast and furious. Bredin says many scammers send fake invoices, often for an ad the entrepreneur never placed. "They're hoping the entrepreneur won't be looking closely at the bill," she says. "You'd be surprised how many of them actually get paid." The bills can be quite clever, too, including such items as fake copies of an ad.

The very nature of operating a homebased business can invite problems. Part-time workers, especially bookkeepers, might be con artists in disguise. "A lot of embezzlers pose as bookkeepers," Bredin says. "You might think they're sweet people with great references who seem to really care about you and your business, but they could very well be scammers." Check-forging and signature-tracing are among the methods such individuals employ.

Some con schemes are much more complicated. Frank E. Rudewicz, director and counsel at Decision Strategies/Fairfax International LLC, an independent investigative consulting firm in Hartford, Connecticut, tells tales of fraudulent operatives issuing letters asking for credit card numbers, con artists offering phony Yellow Pages ad opportunities, and schemes to get free merchandise on credit. Homebased business owners need to be on guard. "Just because you're enjoying the convenience of working at home doesn't mean you put your practical business [sense] aside," Rudewicz says. "Often, you have to be even more professional because you don't have the resources available to you that you may have had [while working at] some other company."

In a world where new offers and ventures pop up on the Internet daily and face-to-face contact is increasingly rare, consumer advocates and advisors suggest taking the time to investigate an offer before spending any money. "Don't conduct business with a new customer based on one source," says Rudewicz. "If they give you a reference, check it out. Don't take their word for it. If you get information over the Internet, don't take it at face value."

That means getting addresses and checking out locations. How long has the person or business operated at their current address? Is a party that claims to be a manufacturer setting up shop in a residential area? Is a thorough list of other customers available, and can they be contacted? These are obvious warning signs, says Rudewicz. Scammers, he adds, "don't like to give out phone numbers. They will beat around the bush to [avoid giving] out concrete information." Asking such questions takes such tricksters by surprise; the more specific your questions are, the less your chances are of becoming a victim.

To counteract potential fraud from new employees, have your accountant examine your accounting procedures for vulnerabilities. "It's a matter of asking, `If someone wanted to embezzle something from me, given my current system, what steps should I take [toward prevention]?' " Are checks stored in a secure place? Who has access to check listings and bank balances?

The Aldermans didn't think to take such precautions when they first considered selling their salad dressings on the open market. After the scam attempt, Peggy says she's grown more cautious. Never again will she let a fast-talking salesperson pressure her into striking a deal without allowing her the time to check things out.

Peggy says she's learned to be careful. Her experience with the Web site sales company "could have been an expensive lesson," she admits. "Fortunately, it turned out for the best."

Red Flags

Scams come in many forms--some come over the phone, others arrive via mail. Consumer advocates, security experts and the Council of Better Business Bureaus Inc. advise small-business owners to scrutinize solicitations before making any agreements or, more important, forking over any money or merchandise. Here's some other advice to follow:

  • Check all invoices. Was the item for which you're being billed authorized by you or one of your employees? Read the fine print, and make sure the bill is really what it seems.
  • Avoid giving too much information over the phone to an unknown entity. Where did the caller get your name? What is he or she trying to sell you?
  • Always get references. The longer the list, the better.
  • Never let anyone pressure you into signing a contract. Scammers depend on catching you off-guard. Don't get browbeaten into making a snap decision.
  • Contact Sources
    American Express Small Business Exchange,

  • Coeur d'Alene Dressing Co., (800) 687-1462

  • Decision Strategies/Fairfax International LLC, (860) 947-5070,

Brian Steinberg is a New York City writer who has contributed to The New York Times and The Washington Post, among other publications.

« Previous 1 Page 2
Loading the player ...

3 Keys to Getting Better, More Restful Sleep

Ads by Google

Share Your Thoughts

Connect with Entrepreneur

Most Shared Stories