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6 Small Business Scams

Small business scams suck. Period. At best they are merely annoying. At worst they are financially and emotionally devastating. Furthermore, small business scams are ever evolving. They are no longer rambling emails from an African prince declaring financial love for you. Current small business scams are multilayered combinations of technology, charisma and good old fashioned cronyism. They occur on the phone, online, via email and in person. They play to business owners pride and intelligence, only to quickly bilk them out of their cash and customer data. In fact, I would be willing to wager that the ‘next big small business scam’ is going on right now under our noses. I’m sure we will be hearing about it soon enough.

Nothing sucks quite as badly as getting a call from a business that has been scammed. No, scratch that. Nothing sucks quite as badly as getting a call from a business that has been scammed AND has no legal recourse. Small business scams do not only hurt the business, but that business’s suppliers, legitimate salespeople and providers. Plus too many scams leave business owners jaded and this may even cost them new (real) leads! The point of this article is to identify some of the more modern scams, as well as some classics, and ways to avoid them.

New Scams

  • Eager Leads In Your Area– Your business hears from a lead generating service. They are getting so many leads from their site and they want to give you some, for a fee that is. The pressure is on since they are looking for just a few service providers in your area.
  • Oh please. Much like the ‘Singles In Your Area’, this is crap. They attempt to lock you into a confounding contract that guarantees none of their claims. So you are without any legal recourse. Yikes. We were recently contacted by one of these services that offered us new leads for a mere $70,000 a year. Imagine how much marketing $70,000 can buy.
  • Your Business is the Best– You get ‘the call’ every business owner hopes for. You are nominated for a big award or a TV spot. Your heart skips- is your business about to go big? Has your hard work paid off? Then they casually mention that they just need you to pay a small fee.
    • This scam caters to pride. No real awards or news channels are going to ask you to pay. We recently had a salesperson who insisted he worked for (redacted) Channel and could get us featured for a reasonable $25,000. A quick Google search showed that he was actually with a third party company and their example videos looked like something made with a cellphone camera and PowerPoint. Pass.
  • The IRS Will Kill You– it starts with an authoritative phone call. Your business owes the IRS back taxes and they are coming to collect in force. But they will be willing to settle for a fee or sell you a settlement.
    • You are not dealing with the IRS. The IRS does not sell settlements. This is a scam. They have little to no tax knowledge, meaning any small business tax issues you might have will still be there after the scammer gets done fleecing your pocketbook.

    Classic Scams

    • Directories– do you get mailers from the Yellow Pages asking you to verify your listing with them? Look closer. Chances are there is a dollar figure and a disclaimer. It is not a confirmation, but a contract. Signing it means you are locking yourself to pay their rate. Even worse, these come from all directories, including the ones with virtually no traffic.
    • You Won!– “Hi this is (redacted) with (redacted company). You recently visited our affiliate website and we have a $100 gift card for your time. To collect, press 1.” Once you press 1, you are connected with a call center on the other side of the world. They cheerily inform you they will send your gift momentarily, all you have to do is send them a $5.50 operating fee to cover their expenses. Spoiler alert: you will never get your gift. You might even get your credit card and identity stolen!
    • The Dream Client– a potential client expresses interest in your merchandise or services. This client looks good to, they speak the language of your business and can obviously afford it. They buy your merchandise or service via check and depart. Hours later you get a frantic call. They overpaid and their spouse/boss/etc will kill them if they see. Can you kindly send them a check for the difference? You do so and ‘magically’ their check bounces. You find yourself out the difference and any product.

    To Sum It Up

    Let’s finish with some easy ways to avoid these scams (and others). Most of these tips will sound like common sense, because they are. Small business scams operate by attempting to send you into a panic or excite you, thus circumventing your common sense.

    1. Research- It took me hundreds of hours and specialized skills to unmask these scams. Just kidding, it was a few minutes on google. Doing your research can help you avoid a very costly mistake.
    2. Do not give out personal information, or pay anything you are not sure of.
    3. Avoid high pressure sales tactics.
    4. Deal locally if possible.
    5. If it sounds too good to be true, it probably is.

    Have you been scammed? Do you think you are being scammed? Know of any other scams we did not mention here? Feel free to comment below or contact us.

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