Green Eggs & Scam

Fake Directory/CD-ROM Ruse

A telemarketer uses high-pressure tactics to get the business owner or employee to participate in, and then purchase, a directory or CD-ROM that never materializes. While there are a number of reputable directory publishers, always ask to see documentation of the company and the product in writing, and check with the BBB to see if any complaints have been filed against the publisher.

Invalid Insurance: Rooker cautions businesses that receive questionable insurance bills or phone solicitations to buy insurance to beware of con artists selling or billing for phony policies. Buy insurance only from reputable brokers or companies, and verify invoices before paying them.

Advance-Fee Loans: According to Berry, it's common for cash-strapped entrepreneurs to fall for the promise of a loan that's "guaranteed" once a processing fee or other fee is received. Once the business owner sends the fee, which can total up to several thousand dollars, the loan never materializes. Berry advises that businesses should conduct financial transactions only with trusted institutions and never to send an advance fee for a business loan.

Domain Registration Rooks: Scam artists try to sell new top-level domain names, such as .biz and .info, before the names are available for assignment, and usually at a highly inflated price. Be sure to register using a reputable service such as Network Solutions or Register.com.

Phony Web Site Scams: You're promised a free Web site and a month of free hosting. Once you give your credit card information, though, you never hear from the provider again. Protect yourself by doing business only with one of the many established and reputable companies that provide this service, asking for references and, if possible, using a credit card for payment to protect yourself from liability.

Hackers, Crackers and Thieves
Have an online business? Then a whole new world of fraud is waiting especially for you. Find out which scams to watch for in Scram, Scam!

Gwen Moran is a freelance writer and co-author of The Complete Idiot's Guide to Business Plans (Alpha, 2010).

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This article was originally published in the January 2002 print edition of Entrepreneur with the headline: Green Eggs & Scam.

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