False billing scams targeting small businesses have reportedly cost the sector in excess of $600,000 the Australian Competition and Consumer Commission's 2011 Targeting Scams report has revealed.
"The good news is that small businesses are becoming more aware of the threat of scams, with the amount lost way down from almost $1 million in 2010," ACCC deputy chair Dr Michael Schaper said.
"But the ACCC is still very concerned that around one in six small businesses that report this activity have lost money to scammers."
False billing scams target small businesses to trick them into paying for unwanted or unauthorised listings or advertisements in magazines, journals, business registers or directories. Common scam tactics are to send a business a subscription form disguised as an outstanding invoice to get the business to sign up for unwanted ongoing advertising services.
"In a wired world of smart phones and apps, it is easy to overlook low tech methods of scamming. But often the simplest scams can be the most effective. A false invoice that is not checked can end up being very damaging," Dr Schaper said.
The ACCC has taken action against a number of traders allegedly involved in misleading and deceptive, or scam-like conduct targeting Australian small businesses. Following ACCC action, in April 2011 the Federal Court imposed penalties totalling $2.7 million against two overseas companies, Yellow Page Marketing BV and Yellow Publishing Limited, for sending thousands of Australian businesses misleading faxes and invoices.
"The ACCC's case sends a warning to Australian and overseas companies that the ACCC will not tolerate this type of conduct," Dr Schaper said.
"If you get an offer that is too good to be true, or doesn't seem quite right, slam it! Hang up the phone, delete the email or tear up the fax."
Other common scams targeting small business include:
- Banking and online phishing scams
- Job and employment scams including business opportunities
- Online retail lease scams.
Top tips for businesses
- Make sure that the staff who process invoices or answer telephone calls are aware of these scams. They will most often be the point of contact for the scammers.
- Always check that goods or services were both ordered and delivered before paying an invoice.
- Never give out or clarify any information about your business unless you know what the information will be used for.
- Don't agree to a business proposal over the phone—always ask for an offer in writing.
- Limit the number of people in your business that have access to funds and have the authority to approve purchases.
- Effective management procedures can go a long way towards preventing these scams from succeeding. Having clearly defined procedures for the verification, payment and management of accounts and invoices is an effective defence against these types of scams.
- Become scam aware by visiting www.scamwatch.gov.au or following @scamwatch_gov on twitter
Most popular small business scams
False Billing Scam
False billing scams target small businesses to trick them into paying for unwanted or unauthorised listings or advertisements in magazines, journals, business registers or directories. The can also be for office supplies. If you have registered a domain name, be sure to carefully check any domain name renewal notices or invoices that you receive. While the notice could be genuine, it could also be from another company trying to sign you up, or it could be from a scammer.
Business Directory Scam
A directory entry or unauthorised advertising scam tries to bill a business for a listing or advertisement in a magazine, journal or business register/directory. The scam might come as a proposal for a subscription disguised as an invoice for an entry in a fake international fax, telex or trade directory.
Faxback Scam
A faxback scam can offer you anything from amazing diets to fantastic deals, business directory entries and competition entries—all you have to do is send a fax back to a premium rate number (usually starting with 19). Premium rate faxes can be charged at more than $6.00 per minute. The scammers make sure your fax takes several minutes to get through, resulting in a high phone bill.
Office Supply Scam
An office supply scam involves you receiving and being charged for goods that you did not order. These scams often involve goods or services that you regularly order—for example, paper, printing supplies, maintenance supplies or advertising.