Published December 2005

Small businesses need
to beware of scams, too

By Lionel Contreras
Guest Columnist

The speed with which business takes place today, coupled with the constant state of cash flow, makes small businesses a target for scam artists.

One would think that with its greater number of transactions, a larger company would be the victim most often targeted. But the truth is, large companies have people paid to do nothing but manage their money — and be on the lookout for suspicious situations concerning their money.

Small-business owners, however, are focused on performing their many-faceted job, which can include being head of human resources, payroll and business development. With so much to do, they may not have the time or the training to detect a scam in play.

Here are a few things to watch for:

The “cash the check” scam. You have checks coming in, and there is a check from some account saying that you’re being refunded or the recipient of some cash-back deal. The refund is a small figure, say $4.23 or $5.25, and you put it in with the other checks, cash it — and next thing you know, you’re overdrawn and in some big trouble with stores all over town.

How this scam works: Someone looks up small businesses on the Internet, gets your address and other various information of public record, and sends you a check for the 4 or 5 bucks. When you cash it, they get the check back, with your account number on it as well as other information you or your bank has put on the cashed check. Next thing you know, you have bank drafts out there that you never wrote. It can happen so fast that you’ll have no idea how it happened.

To protect yourself, first, keep your books tight. If you’re getting a check from someone who is not a customer or a current account, do not cash it until you find the source of the check. The key here is to reconcile everything coming in and going out. You need a tight grip on your money to prevent someone from doing this to you.

On that note, beware of inquiries for financial account information made on the pretext of checking your or your business’s “credit worthiness.” In general, anything that is not initiated by you, do not participate in.

Scam advertising. Never take an e-mail link to a Web site offering services. If the e-mail is from someone you know, talk to them by voice first, because there are ways to hijack your e-mail accounts to send off such e-mails.

Cramming. Cramming puts small charges on your phone bill for services that are supposed to be free. This is mostly initiated from the Internet when signing up for something as a free trial. Check and reconcile your bills — and don’t accept anything you don’t know about.

Lionel Contreras is an information systems technician with The Herald.

Back to the top/December 2005 Main Menu