One thing I have learned from 40 years of being in the business world is that there are a lot of scammers out there who try to separate a business owner from his or her money on a daily basis. Just as people continue to fall for emails and letters offering to share millions with you if you will help them get the money out of their country, or emails stating that you have inherited millions from an uncle you never met or heard of, there are plenty of business scams as well. Obviously a lot of people continue to take the bait or these criminals wouldn't continue to perpetrate these frauds.
Because of the prevalence of these scams, as well as for many other reasons, I learned long ago to sign all of our accounts payable checks. Over the years I have stopped more payments than I can count that had fooled our accounts payable department to the point where they had issued a check to the scammers and sent it to me for my signature. As I look carefully through the payables each week I pull these fraudulent invoices out and tear up the checks we have issued to these companies. One of the biggest pieces of advice I can give a small to medium business owner is not to delegate the signing of the checks to someone else. No one will scrutinize the payables as closely as the owner will. Plus, it discourages your employees from trying to issue checks to fraudulent companies they may have set up if they know that the owner looks at every invoice and check.
When I was in my 30s I was CEO of a computer systems company that sold both nationally and internationally. Right after taking over as CEO I started double checking behind our controller who had signed all of the checks (without the CEO reviewing them) for many years. Just in reviewing the first check run I pulled out four fraudulent invoices that were about to be paid. By reviewing all of our payables and signing the checks I have stopped more than fraud. I have also found invoices that were being paid too soon (as well as too late where we had missed the prompt pay discount), expense account abuse (I once saw where one of my employees gave a 100% tip to a waitress. He was obviously trying to impress her on my nickel.), and non-adherence to company handbook rules. I have found subscriptions to non-business-related magazines, payments to relatives for work done at outrageous rates, and much, much more.
There also are many other scams that escape the scrutiny of some accounts payable personnel. Here are just a few of them:
Copier paper invoices. This is one of the oldest business scams out there. A con artist creates a legitimate looking invoice for copier paper and sends it to thousands of companies whose addresses they get from list brokers. Just like lottery tickets, only a few of them hit, but it only takes a few to make thousands of dollars a month.
Printer cartridge invoices. This is similar to the copier paper scam accept that sometimes these companies actually do provide cartridges. However, invariably, they are of inferior quality and many of them will actually destroy your printer and render your warranty invalid. They send the cartridges with an invoice so some accounts payable people figure the invoice is legitimate as the cartridges were received so someone there must have ordered them.
Yellow Pages scams. We get several invoices a month that look like legitimate invoices for Yellow Page ads. Some of them are so realistic that I have to spend several minutes studying the invoice closely until I finally see some fine print that says: “This is not an invoice. This is a solicitation.” Be on the lookout for these because most of them are extremely realistic looking.
Renewal of trademark invoices. We have trademarked our logo and tagline and it is now time to renew the trademarks and I have gotten several invoices warning me that we will lose the rights to our trademarks if I don’t remit to them ASAP. Scam artists search the Federal Register and find the names of companies whose trademarks are expiring and send out extremely realistic and official-looking invoices that lead you to believe they are from the federal trademark office. Again, if you look at these very closely you will generally find a statement similar to the one on the fake Yellow Pages invoices stating that it is a solicitation, not an invoice. Trust me, whichever law firm did your trademark filing will be certain to send you a renewal notice. Don’t pay an invoice from anyone else.
Overseas orders. Now that email is ubiquitous I, and others in my company, receive emails almost daily from scam artists purporting to be overseas contractors who are having a hard time finding the products we sell in some third world country. They list a large number of products that they need immediately and they even offer to have someone pick up the materials as they will take care of the overseas shipment. They always offer to pay with a credit card. When I first bought my current company the Internet was still in its infancy and a couple of my employees fell for this. The credit cards were initially approved but after the materials left our premises we would hear several days later that the card was fraudulent and the credit card company was not going to be paying us. A lot of business owners think that as long as a credit card is approved at the time of purchase they are out of the woods. This is not the case. Credit card companies reserve the right to reverse the charge if it turns out to be fraudulent. When I get an email asking us to provide materials for overseas jobs I respond that we only do so with payment in advance, via wire transfer. As you might imagine, I never hear back from them.
Better Business Bureau complaints. We also get a fair number of emails purporting to be from the Better Business Bureau stating that a complaint has been made against our company and that we need to click on the attached link to read the complaint. If you click on the link, a virus infects your computer network and can do untold damage to your hardware, your software, and your data. Some hackers even gain access your bank account and write checks from it or wire transfer money to their untraceable overseas accounts. If anyone ever files a complaint against you with the Better Business Bureau you will get a letter from them, not an email. I have verified this with the head of our local Better Business Bureau.
Patent trolling. This is one of the newer scams. How it works is you get a very realistic and official looking notice from a software company stating that your company is using software that violates one of their patents. The letter demands that you purchase a license for their software or they will lock down your computer system. Believe it or not, some of these scammers (most of them based overseas) actually have the ability to lock down your computer system so none of your employees can use it. They gain access to your computer system when someone in your company clicks on a link in a spam email and opens up a Trojan horse that invades your computer system. This is another thing that, despite the numerous warnings, some people continue to do. Do not click on a link in any email from a person you do not know very well! If you get a letter alleging a patent violation turn it over to your local police department immediately.
As I said, this is not a complete list of all of the scams out there. New scams pop up every day. Whenever you’re not sure whether something is a scam, go to www.scamwatch.com and search for information about the possible scam. This can save you a lot of time, money, and aggravation.
Have you encountered other scams? Share your experience in the comments below.