Frauds and scams: don't become another victim

A lot of money is required to maintain a business, so your operations are likely to falter if you are caught unawares by a scammer.

What do you need to do to ensure that doesn't happen?

Stay sceptical

To stay on the ball and avoid scams, WA ScamNet, developed by the Western Australian government's department of commerce, suggests you remain sceptical if a supplier you regularly pay asks you to change their payment details. You should contact the business by phone or email using the contact information provided on the supplier’s website.

Check the details

Double-checking email addresses is important, as scammers may use an email address that is slightly different to the official address, with added or missing characters, such as dashes or periods, or a missing .au at the end of the address.

For example, a scammer may email a business with businesssupplier-australia123.com, with the official email address of the supplier being businesssupplieraustralia123.com.au

“Finance areas are advised to ensure processes around changing bank details are robust and include a step to validate the details via previously established contact details, known good phone numbers, email addresses and, ideally, a known individual,” says Detective Senior Sergeant Steve Potter of the WA Police Major Fraud Squad.

Check with the business

Dr Michael Schaper, deputy chairman of the Australian Competition and Consumer Commission (ACCC), tells My Business that if you are uncertain about an unfamiliar business, you should ask someone at the business a few questions to “satisfy” yourself.

“That can be everything from someone who sends in an email, for example, pretending to be, 'We're changing our bank account details',” he says.

“‘That's kind of funny; established businesses don't tend to change their bank accounts. Let's just confirm that. We won't confirm it using the phone number that you've given us on your email, we'll go back to our records and use the number that we've always dealt with you on, and we'll talk to a real person; we won't talk one computer to another'.”

Check the bills

Another way to avoid falling for scams, according to Dr Schaper, is to have two people check the bills.

“Sometimes the first person is just so busy paying the bills, 'I don't care, I'm just paying them', and the second person will go, 'Hang on, why are we registering our domain name? Surely we've already got that',” he says.

“It's that check, and then you look at it and you go, 'Actually that's not our domain name' or 'We already paid this. This is a scam'.”

Use multiple bank accounts

Having a separate bank account specifically for the business can help you maintain your own personal sustainability if your business gets scammed.

“If you're dealing with online transactions, a lot of really small businesses ... actually use a separate bank account to the one they do their other business transactions in, because if you get compromised, or you get scammed, you can get shut down and it's really hard to get it reinstated, and that can be a real pain in terms of doing business with people,” explains Dr Schaper.

What can you do if you are scammed?

The worst-case scenario is that your business is scammed and you lose a substantial amount of money. What should you do next?

Dr Schaper suggests there are three people you should tell.

“You should report it to your financial institution and preferably the police and Scamwatch,” he says.

And as for the lost money, is there any chance you’ll ever see it again?

“The reality is … you're probably not [going to]. That's a really brutal truth, and the reason for that is most of these scams are actually operating overseas, so they're outside the reach of Australian law,” Mr Schaper adds.

“They don't stand around to reveal their true identity to us, and usually the money, once it's sent to one bank account, will often be very quickly moved on to another account.

“Even finding it becomes really, really difficult. It's not good news, and that's why we put a really strong premium on trying to educate people and say, 'Look, if it just doesn't ring true, just think really carefully before you put money down'.”

Types of financial fraud affecting SMEs:

There are a number of different types of financial fraud and scams that affect SMEs in particular. The most common of these are:

• Phishing scams, which netted $469 million from innocent businesses and consumers in 2012 alone, with the figure believed to have increased significantly each year since then.
• Fake recipient scams, which are an increasing threat as e-commerce volumes soar.
• Reclaim scams, which are a sneaky means of charging victims up-front payments or fees for products or services that don't actually exist.
• Fake investment schemes, which rank lower in terms of the volume of funds fraudulently obtained, but according to the ACCC are the most commonly complained about type of fraud.