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Internet Scambusters (tm)
The #1 Publication on Internet Fraud
http://www.scambusters.org
By Scambusters Audri, Jim and Keith
Issue #298 August 27, 2008
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Hi Scamdex,
Today we take a second wide-ranging look at business scams.
Some, like phony loan schemes and bogus invoices, are after
your money.
Others are more sinister, aiming to compromise your security
and maybe even steal money and data from your customers.
In total, we have seven business scams to tell you about, with
some useful advice on how to spot them and avoid them.
But first, we highly recommend you check out this week's issue
of Scamlines -- What's New in Scams? -- here.
http://www.scambusters.org/scamlines/23.html
Next, we urge you to take a look at these top articles from
our other websites:
Answers to 7 of the Biggest Questions About Photographing
Children: An Interview With Vik Orenstein
http://www.7photographyquestions.com/audio-podcast/
What Does School Registration Have to do With Identity Theft?
http://www.identitytheftfixes.com/what_does_school_registration_have_to_do_with_identity_theft.html
Credit Card Use Poses An Extra Risk For Senior Citizens
http://www.creditcardwhizkid.com/2008/08/credit-card-use-poses-an-extra-risk-for-senior-citizens.html
Home Warranty Policies: A Piece Of Your Wallet For Peace Of Mind?
http://www.consumersavvytips.org/home_warranty_policies_a_piece_of_your_wallet_for_peace_of_m.html
And now for the main feature...
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Business Scams #2: 7 More Tricks to Snag Your Money and Data
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With more than 22 million sole practitioners and small firms
in the US and proportionately large numbers in other
countries, business scams are, well, big business.
Most weeks, in our Scamlines roundup of the latest scam news
headlines, at least a couple will be business scams -- where
unsuspecting firms are conned out of hundreds or thousands of
dollars.
Retailers are a particular target of business scams and you
can read our special report covering some of the most common
ones in Scambusters #290, here:
http://www.scambusters.org/businessscams.html
In addition, many of the tricks played on private individuals
often also reappear as business scams, like phishing and
forged checks.
And, as we know, the crooks don't stand still. They're
constantly dreaming up new scams and variations of
well-established ones. So, for this week's Scambusters
offering, we've pulled together a list of 7 current business
scams to watch out for (in addition to the retail tricks
referred to above).
1. Cheap or Bail-out Business Loans
If you run a business and you've never had to borrow money to
support it, count yourself lucky. These days, with the economy
under pressure, many struggling firms are lured into loan
deals that simply don't make sense.
Clutching at straws, some business owners can't believe their
luck when they find an online lender or loan-arranger
apparently prepared to help them out -- sometimes even with
remarkably low interest rates and repayments.
If it's a business scam, the catch will be a request for
advance fees, usually the first couple of months' payments, an
arrangement fee or some kind of phony insurance -- and
sometimes all three.
The loan, of course, never arrives and the "lender" disappears
with your advance payments.
This trick, the advanced fee loan scam, has been among the top
scams since we first wrote about it back in 1998, though it's
booming right now because so many firms need a cash bail-out.
http://www.scambusters.org/Scambusters24.html
Action: All three types of advance payment may be legitimate
-- though highly unusual. As in all cases where you're asked
to hand over money to someone you don't know, check them out
independently. Contact the local Chamber of Commerce and
business license issuers.
2. Health and Safety Breaches
This type of business scam shows up regularly in our Scamlines
roundups. There are a number of variations but the main trick
is where firms receive a visit or phone call supposedly from
the county or state health department.
The caller may say the department has previously contacted you
without response about non-display of mandatory public or
employee notices. Or they may simply say your posters are out
of date.
One or both of two things happen next: You receive an
on-the-spot "fine" which you have to pay in cash
(face-to-face) or credit card (phone); and/or you're required
to buy up to date posters. In both cases, these are scams.
Another variation is a supposed restaurant or kitchen
inspection where the owner again receives an on-the-spot
"fine."
Action: Health departments don't operate this way. There's no
such thing as an instantly payable fine. And legal posters are
usually available from them free of charge.
3. Hijacking Your Website
One of the most alarming business scams happens when hackers
invade your company website and use it as a staging post for
another scam. This might involve turning it into a "zombie" --
sending out spam -- or collecting details about customers.
Scammers can even redirect customers to other websites, upload
virus programs or other malware onto their computers, or
simply use your server as a storage area for data connected
with their crooked activities.
They usually gain control of your website by logging on with
an authorized username and password. That means either you
gave these away -- for example by unknowingly downloading a
key-logging program -- or you made them relatively easy to
guess.
In fact, it's very important that you keep your website very
secure, even if it is "just information." Since scammers know
your security may be lax, they will try to quietly break into
your site and install a new trojan toolkit that will infect
the PCs of unaware visitors to your trusted website. You can
read more here.
http://www.publictechnology.net/modules.php?op=modload&name=News&file=article&sid=13685
Action: Whether you host your own website or use someone
else's service, you need a strong password that you change
frequently. See this article on Creating Computer Passwords
for guidance.
http://www.scambusters.org/computerpasswords.html
If it's your own server, you need commercial strength security
software and frequent testing. If it's externally hosted,
satisfy yourself about the security the provider uses.
4. Poor Quality Supplies
Firms switch to a new supplier for apparently branded or high
quality items, either for their own use or for resale.
The scammers offer the articles at a significantly discounted
price, but they turn out to be inferior, sometimes cheap
knock-offs of the originals.
This is increasingly common with items originating in China
and Hong Kong, even if the order is placed with a US supplier.
The scammers hope the order will not be quality checked. If it
is, and the shortcoming identified, they may protest ignorance
or even disappear.
Action: The old adage applies here: If it seems too good to be
true, it probably is. Order from reputable suppliers and
always quality check goods received.
5. Bogus Invoices
We covered bogus invoice scams in our issue #280.
http://www.scambusters.org/invoicescams.html
Businesses receive bills for items they haven't ordered, that
may or may not be delivered. The scammers hope the bill will
slip through the net and get paid without the order being
checked.
In a recent variation, scammers turn up at stores or offices
when they know the owner or manager is away, with an invoice
for a directory advertisement (see below) and demand immediate
payment. If the employee is senior enough, he may hand over
the payment.
Action: Use an order number system and check all invoices
against them. Don't permit employees to pay on demand.
6. Phony Advertising or Sponsorship Deals
In this business scam, firms are invited to advertise in
special publications, like one-off magazines, phone
directories, calendars, even restaurant table placemats.
They're asked to pay upfront. The item is then either not
published or it's a poor-quality job with limited or
non-existent distribution.
An increasingly common variation is a request for sponsorship
or participation in an event such as a public fair or
exhibition. You might be asked to support some kind of
fundraiser or take a booth at a trade show, which turn out to
be bogus.
Action: Always check out the track record of the promoter. You
need authentic evidence of previous successes. If that's not
available but you think the offer is genuine, pay only a
deposit and check the credentials of the individual.
7. Fuel Tax Refund
This business scam mainly targets Canadian trucking companies
operating cross-border into the US. With fuel prices at or
near historic highs, scammers find them easy prey.
It works like this: Claiming to be tax accounting specialists,
the scammers tell truckers they can help reclaim taxes paid on
fuel bought in the US. They say it's a no-risk deal as they
take commission only from rebates.
They then make a fraudulent claim to the IRS using a refund
scheme intended for US farmers. The IRS pays first then checks
later.
By this time, the scammers have taken their commission and the
trucker is ordered to repay the full sum by the IRS. They may
also prosecute for fraud.
Action: Simply know that no such refund is available.
These are just a handful of the many tricks hackers and con
artists will use to carry out their business scams. No doubt
they are planning more, as we write this newsletter. But you
can take comfort that when they do, we've got our eyes open
for them -- and we'll let you know!
That's all we have for today, but we'll be back next week with
another issue. See you then!
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