False billing scams hit small businesses

The Australian Competition and Consumer Commission is warning small business owners about false billing scams this Fraud Week after the Targeting Scams Report 2013 revealed a 45 per cent increase in complaints.

“False billing scams continue to be the most common scam targeting the small business community, with 3,672 reports received in 2013 and almost $725,000 reported lost,” ACCC Deputy Chairman Dr Michael Schaper said.

False billing scams attempt to trick busy businesses into paying for unwanted or unauthorised listings or advertisements in magazines, journals or business directories.

“With the end of the financial year being a prime time to settle accounts, it pays to take a moment and check if invoices are the real deal,” Dr Schaper said.

“Often a scam is disguised as an outstanding invoice to get the business to sign-up for unwanted advertising or office supplies. Another common approach involves sending invoices for the renewal of a non-existent domain name registration.”

As part of Fraud Week, Dr Schaper offered small businesses advice on avoiding false billing scams:

  • Make sure the business you are dealing with is the real deal – if you receive a form or tax invoice out of the blue, verify who they are by contacting the company directly using contact details you sourced independently through a phone book or online search.
  • Make your business ‘fraud-free’ – effective management procedures can go a long way towards preventing scams. Have a clearly defined process for verifying and paying accounts and invoices, and try to avoid giving too many staff authorisation to make orders or pay invoices.
  • Don’t be intimidated – do not let anyone pressure you into making decisions involving payments or contracts. If you are unsure, always seek independent financial or legal advice.
  • Update your IT security software regularly and make sure you use and offer secure online payment methods.

Dr Schaper said the ACCC has taken enforcement action where it can to deter and discourage scammers targeting Australian small businesses.

“In the past year, we have taken court action against traders targeting small businesses with misleading and deceptive or scam-like conduct.”

  • In February 2013, the Federal Court made declarations by consent that a former director of Crimeguard International Security Systems Pty Ltd was involved in a pyramid selling scheme. The court made an order banning the former director from managing a company for five years.
  • In March 2013, the Federal Court ordered Adepto Publications Pty Ltd, its sole owner and a former manager to pay penalties totalling $750,000 after they admitted to making made false and misleading representations about advertising services that were never requested. The operators also falsely claimed that the advertising services were for publications with a philanthropic slant.
  • In December 2013, the Federal Court ordered the sole director and the sales manager of Artorios Ink to pay a penalty of $50,000 each after they admitted to deliberately misleading and deceiving small businesses to generate ink cartridge sales.