Seven Scams that Target Small Businesses

Being vigilant against fraud is not only important for a company’s bottom line, it also strengthens customer trust in the business. 

Every year the BBB receives thousands of complaints from small business owners who fell for an invoicing scam or were misled into paying for products and services they didn't want. Scammers aren't always trying to steal money from a business; sometimes they are after a company’s financial or customer data and will use many kinds of high and low-tech methods for getting it.

Here are seven scams that commonly target small businesses:

1. Directory Scams – A perennial problem that has plagued businesses for decades involves deceptive sales for directories. Commonly the scammer will call the business claiming they just want to update the company’s entry in an online directory or the scammer might lie about being with the Yellow Pages. The business is later billed hundreds of dollars for listing services they didn't agree to or for ads which they thought would be in the Yellow Pages.
2. Office Supply Scams – Some scammers prey on small business owners hoping that they won’t notice a bill for office supplies like toner or paper which the company never ordered.  Every year BBB receives thousands of complaints from small business owners who were deceived by office supply companies and billed for products they didn’t want.
3. Overpayment Scams – Be extremely cautious if a customer overpays using a check or credit card and then asks you to wire the extra money back to them or to a third party. Overpayment scams target any number of different companies including catering businesses, manufacturers, wholesalers and even sellers on sites like eBay, Craigslist and Etsy.
4. Data Breaches – No matter how vigilant your company is a data breach can still happen. Whether it’s the result of hackers, negligence or a disgruntled employee, a data breach can have a severe impact on the level of trust customers have in your business. You can learn how to defend your company from a data breach for free with BBB’s Data Security – Made Simpler at www.bbb.org/data-security.
5. Vanity Awards – While it’s flattering to be recognized for your hard work, some awards are just money-making schemes and have no actual merit. If you are approached about receiving a business or leadership award, research the opportunity carefully and be wary if you’re asked to pay money.
6. Stolen Identity – Scammers will often pretend to be a legitimate company for the purposes of ripping off consumers. When it comes to stolen identity, the company doesn’t necessarily lose money, but their reputation is potentially tarnished as angry customers who were ripped off by the scammers think the real company is responsible.
7. Phishing E-mails – Some phishing e-mails specifically target small business owners with the goal of hacking into their computer or network. Common examples include e-mails pretending to be from the IRS claiming the company is being audited or phony e-mails from the BBB saying the company has received a complaint.  If you receive a suspicious e-mail from a government agency or the BBB, don’t click on any links or open any attachments. Contact the agency or the BBB directly to confirm the legitimacy of the e-mail.

What other scams have you heard of?

Cut Down on Junk Mail and Spam

There are a few things more annoying than junk mail, spam and unsolicited calls and texts messages.

But how do you stop them? While it’s nearly impossible to completely eliminate junk mail, spam text messages and unwanted phone calls, BBB recommends taking the following steps for getting your inboxes and phone lines under control.

Unwanted mail shouldn't cost you your identity. Pre-approved credit card offers are an easy target for identity thieves who can steal incoming mail and use these offers to open fraudulent credit accounts. Stopping these pre-screened credit offers can help reduce the chances of identity theft. U.S. consumers can “opt-out” of receiving pre-approved credit card offers for at least five years by calling 1-888-5-OPTOUT (567-8688) or visit: optoutprescreen.com. This service is offered by the three major credit reporting bureaus, Equifax, Experian andTransUnion.

Stop unwanted direct mail solicitations. To stop most mailings, U.S. consumers can go to dmachoice.org and opt out of mail from members of the Direct Marketing Association. DMA regularly updates its list, but it may take up to six months before solicitations from all DMA members stop.

Has your evening been interrupted by telemarketers? You’re not alone. The U.S. government’s National Do Not Call Registry is a free, easy way to reduce the telemarketing calls you get at home. To register your phone number or to get information about the registry, visit donotcall.gov, or call 1-888-382-1222 from the phone number you want to register. You will get fewer telemarketing calls within 31 days of registering your number.

Are you receiving spam text messages? First and foremost, don’t respond. Responding to the text message only confirms a working number and opens the door for more messages. If your number is already on the Do Not Call Registry and you’re still receiving messages and phone calls, file a complaint with the FCC and consider PrivacyStar. BBB National Partners AT&T and Verizon have partnered with PrivacyStar to give you back control of your smartphone. The smartphone application, available in the U.S. for Android, BlackBerry and iPhone, lets you block unwanted numbers, look up unknown numbers, and file a complaint with the FTC.

Beware of Business Identity Theft

The most sophisticated identity thieves are now pursuing even bigger payoffs by targeting businesses. Because businesses have higher credit limits and make larger purchases than consumers, charges by scammers are less likely to be noticed by owners, accountants and creditors.


ID theft aimed at stealing directly from a business isn’t the only type of commercial identity theft. Another form of business identity theft happens when a scammer poses as the company in order to rip off unsuspecting consumers. Following are examples of common business identity theft schemes identified by BBB.

Defrauding the Business
A crafty ID thief can do a lot of damage with a company’s Employer Identification Number, including gaining access to bank and credit card accounts or opening up new lines of credit under the business’s name. Business identity theft can also be perpetrated by scammers—and sometimes even employees—who purchase items in the company’s name either for personal use or to resell.

Phishing E-mails
Phishing e-mails are a common example of business ID theft, and all are designed to defraud consumers. Phishing e-mails are spam disguised as messages from a business or government agency, and are used to coerce sensitive financial information from the recipient or to install malware and viruses on recipients’ computers.

Defrauding Consumers
In many cases, criminals will hijack a company’s name and reputation to commit consumer fraud, such as advance fee loan or lottery scams. Scammers use and leverage the company’s identity and good reputation to create a trustworthy façade behind which they operate their scam. In BBB’s experience, business owners are usually alerted to the identity theft by angry consumers who were ripped off by the scammers.

Following are steps BBB recommends small business owners take to mitigate harm if their business identity has been stolen.

Alert the Authorities
Business owners need to immediately contact their local police department if they believe the company’s identity has been compromised. In some cases where bank or credit accounts have been compromised, law enforcement investigators may want the accounts to remain open in order to track down the thieves. If scammers are using the company’s name on phishing e-mails or with phony Web sites, business owners can also contact the FBI’s Internet Crime Complaint Center at www.ic3.gov.

Alert Bank and Credit Card Companies
If scammers are accessing the business’s credit or bank accounts, forging company checks or opening up new lines of credit, it’s important for a small business owner to notify financial institutions involved in order to limit any further unauthorized transactions. Before closing any accounts, the business owners will want to receive the go-ahead from law enforcement so as not to jeopardize ongoing investigations.

Alert the Public
If the company’s identity has been stolen and is being used to rip off customers, warning the public is a top priority to prevent additional people from becoming victims. An easy first step is to prominently post a warning on the company’s home page briefly explaining the threat. Depending on the scope of the scam, business owners might also want to consider alerting media or making direct contact with customers via phone or e-mail. Businesses can also contact their BBB  for help in getting information out to consumers quickly.

Review Credit Report
If the business is a sole proprietorship, then the same consumer protections apply as if an individual’s ID were stolen—such as access to free credit reports and the ability to place a fraud alert on the report. Unfortunately for most businesses, monitoring their credit history is not that easy. Business credit reports exist; however, they don’t typically include the information necessary for detecting fraud. Small and medium-size enterprises can, however, increase internal controls and monitoring of accounts in order to better track abuses.