SLAMMING THE DOOR ON CON ARTISTS

[Anonymous]

Slamming the Door on Con Artists

Small businesses make tempting targets for scammers. Here’s how to protect yourself

Sham invoices, charitable-donation schemes, toner
fraud, phony advertising: Scammers are increasingly sophisticated and creative
in their schemes to separate you from your money. And small businesses are a
favorite target of those who run con games and fast-talking “promotions.” How do
you protect yourself from crooks? Only by constant vigilance and good training
for your employees, says Kathleen Calligan, CEO of the Better Business Bureau of
Middle Tennessee. Smart Answers columnist Karen E. Klein recently spoke with
Calligan about the latest scams — and how to avoid falling victim to them.
Edited excerpts of their conversation follow:

Q: We know that
fraudulent operators target vulnerable groups like the elderly, but can they
really pull one over on an entire business?
A: One of the greatest
misconceptions in the marketplace is that small-business people are more
conscientious. I tell you, if I were a con artist, I wouldn’t fool with
consumers — I’d go straight to small business! In a small business, the owner
is wearing lot of hats and has to worry about taking care of customers,
marketing, everything from A to Z.

And one of the things small-business
people pride themselves on is paying their bills on time, so they tell the
person in charge of accounts payable to pay as soon as the invoices come in. The
people doing the books may not have a lot of familiarity with the company, so
they don’t know if an invoice comes from a legitimate vendor or not.

Q: Despite a constant wave of new scams, you say one of the oldest is
also one of the most effective — and involves copy machines?
A: The
office manager is trained to be very open and friendly, not suspicious. So when
a con artist calls and says they’re a copier-service company and they need to
get the copy machine VIN numbers, that person jumps up and gets them. The guy
posing as a copier-service representative gets all the details on the make and
model, and then gets the name of the person who handles ordering.

Your
customer-friendly staff gives it all to him, and two weeks later you get toner
and paper arriving COD, directed to your office manager. The staff signs for it
and the accounts payable person pays for it, but the toner is not only twice as
expensive as it should be, it’s also low-quality and will completely gum up your
machine.

This is a scam that has been going on for 28 years, and just as
many fall for it now as did during the ’70s. They do the same thing sending
you overpriced paper and light bulbs that are basically worthless.

Q:
How do you steer clear of that, without being unfriendly or suspicious toward
legitimate suppliers?
A: It’s not difficult: Make sure you know your
vendors. Check out any COD package before you sign for it, especially when you
don’t remember ordering it. Most of this comes down to using common sense in all
your business dealings and being wary. Ask questions of unfamiliar service or
sales personnel and telephone promoters. A business person who gathers all the
facts should be able to separate the scheme from the honest transaction.

Q: Training your staff to be cautious must be crucial, too.
A:
Absolutely. And unfortunately, small-business people rarely have a focus on
training their staff to avoid fraud. They train them how to take orders and how
to help customers, but they don’t give them things to look out for, because most
don’t consider their businesses to be targets for criminals.

Q: So
most small-business owners are simply naïve?
A: I constantly hear
business owners repeat one phrase: “I just didn’t know!” But they really should
know. As soon as you incorporate or get a business license, your contact
information is sold by the local and federal governments that collect it,
and con artists will come knocking: Not usually at your front door but through
your e-mail or your telephone. They come disguised as legitimate businesses
there to serve you.

Q: What are some of the other popular scams out
there right now?
A: There are a lot of ways to hijack your phone service,
so that when you call an 800 number to return a fax survey, for instance, the
call rolls over to a 900 number after the fax goes through and your line gets
tied up for a long time at a high cost per minute. There’s an announcement on
the line telling you that it’s a pay-per-minute call, but since no one’s
monitoring the fax machine, no one hears that. Some businesses find hundreds of
dollars on their phone bills that they can’t account for, but they pay them
because they aren’t watching closely.

Another clever one is the con
artist who sends your company a check for a small amount. Your bookkeeper
doesn’t know what it’s for, but he stamps and deposits it anyway. Turns out
there’s very small print on the check stating that you agree to a monthly
withdrawal from your account. Once your company has signed off on that, and the
scammer has your account number on the back of the check, he starts siphoning a
small amount from your account — so small that nobody notices it until hundreds
of dollars are gone.

Q: That’s so subtle — how do you prevent
something like that?
A: It’s all about education. Your accounts-payable
person should act as a guard at the front door — and at the door to
the checkbook — watching very closely what’s coming in and going out. You need
to institute strict controls in the accounting department. The handling of
invoices, for example, should be centralized, and authorization should be
closely checked. Anybody who makes purchases or writes checks has to know the
red flags to look for. If they don’t, they’re going to be taken advantage of.

[Author]

March 21, 2005 at 9:52 AM