Top Small Business Scams Revealed by FTC, BBB
Thousands of small business owners fall victim to scams every year. How can you stay ahead of the curve and protect your pocketbook?
In an effort to help business owners recognize potential threats, the Better Business Bureau and the Federal Trade Commission's Bureau of Consumer Protection recently highlighted some of the top small business scams that are out there today.
Here are five scams every small business owner should beware:
- Business opportunity scams. It's not uncommon for small business owners to become investors in other business opportunities. Regardless of whether the opportunity is ancillary or unrelated to your primary business, it's always important to vet the proposal before you fork over your hard-earned cash. Before signing on to the collaboration, get the low-down on the business by checking BBB.org. Also, get everything in writing.
- Charity solicitation scams. Many charities rely on the generosity of kind-hearted business owners. Unfortunately, you can't always take a charity at face value and trust the money is going where it says it's going. To gauge the credibility of a charity, do some research before you donate (for example, by looking it up on Give.org).
- Coupon book promotion scams. Businesses often enter into agreements with coupon book promoters to attract customers. Unfortunately, promoters have been known to "change the terms of the coupons to make them more attractive to buyers, when the books are oversold or when books are primarily distributed outside the firm's normal business area," a BBB spokeswoman writes for The MetroWest Daily News. Do your homework: verify the promoter's trustworthiness, and make certain the terms and conditions of the agreement are clearly spelled out.
- "Special deal" scams. Some businesses get approached with special deals and promotions on items like office supplies. If it seems too good to be true, it probably is. Such bargains often have strings attached that entail new obligations that end up costing more.
- Business directory scams. If you've received a bill or invoice for a "business directory listing" you never ordered, it may be a scam. Bogus firms send such bills to mislead businesses into paying for unordered, unwanted and often useless business directory listings, according to an FTC consumer alert.
For more information, check out the BBB's fraud prevention tips and resources.
Follow FindLaw for Consumers on Google+.