|How to Steer Clear of
|While most of the businesses you find
online are legitimate, you may occasionally encounter a scam. Find
out how to identify fraud, and how to protect your business when investing
or conducting other financial transactions over the Internet.
While most of the millions of businesses that call the Web home
are legitimate, trustworthy companies, you may come across a scam
in your dealings online. The Internet's inherent nature makes it
easy for these errant entrepreneurs to start a business scam --
and difficult to catch them. It is inexpensive to set up a storefront
online, and cheap to acquire untargeted bulk mail lists for email
marketing. And a professional-looking Web site can fool even experienced
It can be difficult to catch online scam artists in the act because
the digital trail they leave disappears quickly -- in as little
as a week, depending on how long an ISP keeps a log. It also takes
a lot of technical expertise to track these swindlers, providing
a challenge for fraud-related crime units. Scam artists are encouraged
by these factors, hoping that setting up shop on the Web will prove
easy and profitable.
Small businesses are a target
Some scam artists specifically target small businesses. Here are
some of the reasons why:
- They may have less experience. Scammers prey on the inexperienced
-- those new to the Internet or the business that may not know how
to avoid scams.
- They don't have a full-time legal staff. Most small businesses
don't employ a full-time legal staff that could investigate possible
frauds or prosecute a scam once it has been committed. While small
business owners may be able to perform these functions themselves,
scam artists count on business owners not having time to pursue
them while running the business.
- They may need financial backing. New and potential small
business owners are often in the market for some sort of financial
backing to get their feet on the ground. Whether to set up shop,
acquire new computers and inventory, or hire employees, small businesses
need capital to begin and maintain business. Online deals offering
"free money" and upfront cash can be tempting for the
small business owner.
Scams to watch out for
- Funding and "free money" scams: In these scams,
advertisers offer "registration" or "information"
relating to government programs you might qualify for. They require
a fee charged to your credit card, in exchange for a gateway to
the secrets of government programs or other sources of free money
for small businesses. They may claim the fee is for processing your
application, which is required to claim this free money. The credit
card transaction takes place over an insecure server, and the company
soon disappears, abuses the credit card information, or simply does
not deliver the product they claimed they would.
Pyramid schemes: In these illegal schemes, investors
recruited early are paid with money from investors recruited later,
but eventually it becomes impossible to have enough recruits for the
payment structure to work, so the scheme collapses and most of the
investors lose the money they've put in. An "investment strategy"
that requires you to invest a large sum of money and recruit others
to do the same is probably a pyramid scheme. You can get more information
from the Federal Trade Commission on this issue.
- Stock manipulation: The distribution of fraudulent company
information can affect stock prices -- to the scam artist's advantage.
The false information may warn of bankruptcy or acquisition, affecting
the price of stock. If you invest in stocks with your small business
revenue, be aware of this scam. Check your sources carefully when
you receive stock tips or news.
- Internet auction fraud: While you may find online auctions
a useful way to obtain reduced-price goods for your small business,
be cautious when conducting transactions on auction sites. While
most auctions featured at reputable sites are genuine and trustworthy,
this form of online trade gives scam artists the opportunity to
take advantage of buyers. Thoroughly read the auction site's agreement
to be sure you will be protected in the case of a scam, such as
no-show products or fraudulent use of your credit card. Make sure
the site you are using offers secured payment options. Finally,
be sure to keep hard copies of all bids and transaction confirmations.
Resources to help you spot a scam
There are many resources available that you can use if you have
questions about the legitimacy of a business. If you'd like to learn
more about a venture you're considering, the Internet can help you.
A few of these resources are listed below:
The government has many resources for small business owners and
those concerned about fraud or Internet scams.
Reliability seal program is the Better Business Bureau's reliability
assurance program for the Web. Qualifying companies post the BBB seal
on their website. The seal allows Web shoppers to check BBB information
on a company and be assured the company will stand behind its service.
You may occasionally come across a deal, offer, or company online
that seems too good to be true. Here are some additional guidelines
to keep your small business safe from scams:
- Use common sense. If a deal seems to good to be true,
it probably is.
- Beware bulk email. Bulk email that uses copious capitalization
and heavy-handed punctuation is a dead giveaway for offers that
are too good to be true. For example: "APPLY NOW!!!!!!! EARN
$$$$$ FOR YOUR BUSINESS!!!!" This type of aggressive marketing
probably isn't the sign of a reputable company or legitimate offer.
- Watch out for anonymous addresses. Also beware of anonymous
email or addresses that appear to be randomly generated, such as
"email@example.com." Senders of unsolicited
bulk email -- spammers -- use this tactic to avoid being blocked
by Internet service providers and individual users.
- Bring backup. Print a hard copy of online transactions.
If you take advantage of an online offer or purchase, print the
confirmation page, including the URL for the offer, time and date,
transaction amount, and any other relevant information. You will
need this information later if the deal turns sour.
The Internet is an easy place for scam artists to lurk about anonymously,
taking advantage of small business owners and others in need of capital
or goods and services. The Internet is also a vast resource if you're
in search of ways to save money for your small business. If you are
wary of deals too good to be true, and investigate the claims of a
company before spending your hard-earned cash, you can steer clear
of Internet scams.