Don't Route Vendor Payments to Scammers, BBB Warns

The Better Business Bureau has issued an alert to business owners about a new scam targeting business vendor payments.

This scam is particularly easy to miss, reports the BBB, because unlike many other business scams which rely on selling business owners fake or useless products and services, this latest scam uses the names of real vendors that the targeted companies already do business with.

How does the scam work, and how can you avoid being taken for a costly ride?

Scam Email Requests Change in Payment Method

Although the scam has several different variations, the basic theme is the same: The person who's responsible for paying invoices to vendors receives an urgent email -- either from an executive within the company or from the vendor directly -- requesting that instead of sending a check for payment, money needs to be wired directly to a bank account.

Of course, that money never makes it to the vendor. The email request was sent either from an email address disguised to appear legit -- known as spoofing -- or from an actual email account used by the vendor or the executive that has been hacked by the scammers.

According to the FTC, average losses in this scam have totaled $55,000, with some businesses losing as much as $800,000. So how can you avoid being the next victim?

Tips for Your Business

Here are a few suggested tips from the FTC and the BBB for avoiding this scam.

1. Spread the word. Share this post or the BBB alert around to co-workers or post it in a common area.
2. Have a multiple-person approval process in place. For payments above a certain dollar amount, it might be best to have the transaction go through a multi-party approval.
3. Pay close attention to email addresses. Confirm that an email address isn't one letter or number off from the address of the person you assume it's from. That is typically a big red flag for a potential scam.
4. Be suspicious of wire transfers. Any time you are asked to wire money directly into an account, be sure to double- or even triple-check the veracity of the details: where it's going, who requested it, etc.

The FTC requests that any businesses victimized by this scam or a variation thereof report it to the Internet Crime Complaint Center or by using the FTC's online complaint assistant.

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