Northern Territory businesses were today warned of an advertising scam currently operating which tries to bill business for unauthorised advertising.
The Australian Competition and Consumer Commission's Darwin office has told local businesses to be especially careful if telephoned by people claiming to be advertising publishers.
Telefraud, as it's sometimes called, has several forms but invariably relies on convincing business proprietors that they owed money for an advertisement or listing in a magazine, journal or register, ACCC Darwin director, Mr Derek Farrell, said today. The fraudsters often play on the victims good nature, forgetfulness or fear of legal action.
The problem's often made worse when the business' purchasing procedures are lax. This makes it hard to refute a demand for payment. Partnerships are often particularly at risk in such situations as the fraudster will often claim that the other partner has authorised the advertisement.
One common approach is to ring a firm asking to confirm details of an advertisement supposedly booked some time earlier.
They often read out a genuine advertisement that the business has published somewhere else - or an entry in the Yellow Pages. Soon afterwards they send out an invoice for several hundred dollars.
Many business fall for this line simply because they dont have adequate controls or records of their advertising. Telefraud thieves thrive on uncertainty.
Another common telefraud tactic is to intimidate people who wont pay by threatening legal action. The best defence is to simply apply sound business practices. Be careful of any telephone callers selling advertising. If the caller claims to be from an organisation, check their number in the telephone book and ring them back.
A further variation involves soliciting of entries for bogus international fax, telex or trade directories. Again, the variations of this scam are limited only by the ingenuity of the perpetrators, but include the sending proposals for subscriptions disguised as invoices for entries. Sometimes they were doctored to look like those used by genuine directory publishers. Alternatively, people are led to believe that they are responding to an offer for a free entry. In fact, they are ordering entries requiring later payment.
Mr Farrell recommended a eight-point plan to help combat telefraud and liability for unsolicited entries:
Ask for proof of the magazine or directory's existence, sponsorship or circulation. Authorise all advertising or entries in writing and keep records. Insist on getting a proof of the advertisement or entry before paying anything. Check all incoming invoices carefully. Limit the number of staff authorised to place or pay for advertisements or invoices. Ask for details of other local businesses who have previously advertised and check with them that they received what they paid for. If you know of telefraud in your area, spread the word to other businesses and local trade associations. Most importantly, dont pay for an advertisement or entry you didnt authorise.
Mr Farrell said that the Trade Practices Act provided for severe penalties where cases of telefraud could be proved. He added, however, that the fraudsters were accomplished at covering their tracks and were usually very difficult to locate.
The best strategy was prevention. Adopting prudent business practices would make the scams less profitable and more risky for those who preyed on the business community in this way.
Further information about this media release Mr Derek Farrell, Regional Director, (08) 8943 1499 Ms Lin Enright, Director, Public Relations, (02) 6264 2808
