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According to the Better Business Bureau (BBB), every year businesses lose millions of dollars to con artists through a host of different scams. It's easy for multitasked entrepreneurs to get swindled into paying phony invoices, footing the bill on unordered merchandise or agreeing to deals that are almost always too good to be true. "What happens many times is that business owners are so busy and usually have so many expenses to pay every month that they do not inspect carefully what they are paying for," notes Steve Bernas, director of operations at the BBB in Chicago.
The best way to protect yourself is to know what to watch out for. The most common scams that target business owners, according to the BBB, are the following:
- Advance-fee loan brokers. These people assure you they'll find you a loan-but mandate that you first submit an "advance fee" for the broker to prepare a business plan and do the legwork. More often than not, the loan broker takes your money and makes no effort to find the needed capital.
- Phony invoices. This is a biggie, and it can take many forms. With this scam, you receive a bill for merchandise or services that you either never ordered or never received. And if you don't know better, you might end up paying the bill-or paying to return the item-thinking you forgot about the order or are somehow obligated to pay.
- Office supply pirates. With this scam, a common approach is to claim "liquidation of stock" or "going out of business" prices on office supplies. The merchandise, if delivered at all, is typically shoddy and overpriced, or you might wind up with twice the amount ordered.
- The vanity pitch. With this one, you get a letter claiming you've been chosen to appear in a special publication (such as a Who's Who-type book) or receive a special reward. If you buy the pitch, you could wind up with a subscription fee, a charge for the listing or a hefty bill for the publication-which probably won't receive the kind of widespread distribution you thought it would.
If you're the victim of one of these scams, all is not lost, notes Bernas. You simply need to know your rights. If a vendor sends you unordered merchandise, by law you can treat that merchandise as a gift. You do not have to pay for it, nor do you have to send it back.
Secondly, be hyper-aware of all orders you place. Keep careful records so you can go back to them later before paying any bills. If you have employees, train them in how to handle the authorization and documentation of purchasing supplies or goods. Most important, train yourself and your employees to identify common scams.
Finally, always ask for substantiation before closing a deal. "Ask for previous consumers who have benefited from this opportunity," says Bernas. The BBB and other consumer protection agencies like the Federal Trade Commission can also help you locate complaint histories as well as verify the reliability of a company.
And if you do get scammed, file a complaint. "Don't sit back and let it go-come forward," advises Bernas, "because you can prevent this from happening to someone else." To file a complaint, visit the FTC or the BBB online, or contact your state's attorney general's office.