In today’s interconnected world, the rise of international scammers poses a threat to businesses and consumers. These scammers pose as US based service providers by creating websites that make them appear legitimate. In addition, some of them pay a subscription for a right to use an address, making it even more difficult to distinguish between a US based provider and a foreign scammer. To protect yourself as a consumer and your business, it is important to be aware of the steps to take in order to verify any potential partners or vendors. While this list is not exhaustive, here is a list of scams to be aware of for consumers and businesses, and precautions to take before entering into a transaction:
1. Check with the State Secretary of State:
Now that you have the name of the business that you plan to complete a transaction with, you must ensure that they are legitimate. Every business must be registered with the state in which they operate. Visit the Secretary of State’s website for the state where the business claims to be based, within minutes you will be able to determine if they are registered.
2. Look Up Fictitious Business Name Statements:
Often times, businesses operate under a name different from their legal entity or they operate in their own name but with a fictitious business name (ex: Smith Holdings, LLC DBA John’s Donuts or John Smith DBA John’s Donuts). This is possible through a fictitious business name statement, filed at the county a business operates in. Based on the address provided by the service provider or entity that you plan on completing a transaction with, you will be able to determine what county they operate in or allege to operate in. Once you find the county, you can verify this information online on the county website. If no statement exists, it is highly likely you are working with a fraudster. Anyone can create a website with a name that is not taken, but a legitimate business is recognized by a government authority and is subject to various laws.
3. Examine City Business License Records:
Most cities require businesses to obtain a business license in order to operate within the confines of the city. Based on the address provided by the service provider or entity that you plan on completing a transaction with, you will be able to determine what city they operate in or allege to operate in. Once you find the county, you can verify this information online on the city website.
4. Check Online Reviews and References:
Reliable businesses will have a track record of positive interactions, however, be cautious of overly positive reviews that seem suspicious. There are many fake reviews can be paid for that are usually obvious when you actually read through it. At a glance, you might think that this business is a go but if you look through and read it, they are distinguishable from real reviews.
5. Request Documentation:
Don’t hesitate to ask for copies of business licenses, permits, and other relevant documents. Legitimate businesses will have no problem providing this information. You may also request a W9 form, which includes a tax ID number. Some businesses are less amenable to this, but most of the time they do not hesitate to provide a copy of their W9 form.
Scams:
IRS Impersonation Scam
Scammers will also call, mainly senior citizens and elderly, claiming that they are the IRS and that there is a seriously delinquent balance owed making threats. Threats include sending the police to your door and sending you to jail by a certain time if funds are not received. IRS balances have a process and procedure prior to even getting collected. The IRS does not just call you and make such threats. You can even create an IRS account and view your records online to be sure of no balance being owed.
Utilities provider
Scammers have become very creative these days. They understand that retail storefronts have rush hours and split-second decisions need to be made in order to attend to customer needs. Scammers have been calling retail stores and claiming to be the utility company and threatening to shut off services if payment is not made instantly via a money order. They instruct cashiers to take cash out of the register and go to a location that issues money orders or to go to a bank and deposit it to a specific account.
Another way scammers find ways to scam businesses is by reaching out to offices that have fiber optic or internet speed upgrades in their area. These scammers will call and pose as a service provider that can establish a new account. Beware of these scammers, check the number they called you with. If you truly want to check if there is a service upgrade available, call the number on your billing statement.
Domain Renewal Letters
Scammers view public details regarding websites and send renewal notices to the address listed in the ICANN registry. Your domain host most likely communicates to you via email regarding renewals. Any mailed domain renewal is most likely a scam, not to mention that they end up owning your domain once you pay them the fee and replace your website with something malicious. However, you should still take the time and review the renewal notice, match it with the domain host that you bought the domain with, and ICANN records. It also does not hurt to contact your domain host and ask.
Invoice Fraud
Often times, scammers will mail a corporate headquarter an invoice that looks like a company ordered items or a service was rendered and unpaid. The first step in tackling the legitimacy of this invoice is by going through the steps that was suggested for consumers and then looking up the main number for a company online. Often times these scammers use the letter head of a large and reputable company and they deceive some of the most sophisticated billing departments.
Wire Fraud
During transactions that require wire transfers, often times scammers are alerted, and they send different wiring instructions. For example, during real estate transactions, a buyer may be contacted by a scammer with escrow wiring instructions. It is important to contact the person you are attempting to wire and confirm the wiring instructions prior to sending the wire. Scammers will send legitimate looking emails with the letter head and alter a number or two in the phone number to contact them when confirming wiring instructions. That is why you must establish a point of contact and verify directly. In real estate transactions, that point of contact is usually established from the start of the transaction at the escrow company.
Impersonation
Scammers have impersonated CEOs and other upper management in order to gain access to certain accounts that can lead them to information. With this information, an organization can be at risk for data breaches, theft, etc. That is why it is important to have a safeguard system such as two-factor authentication and or a second form of contact to confirm that the request is being made by the executive and not a scammer.
Conclusion
In an era where online business is growing, appearances can be deceiving. It is now more important than ever to exercise precautions thorough checks before entering into any business transaction. By utilizing state, county, and city websites to verify the business registration, you can protect yourself from illegitimate businesses and ensure are transacting with legitimate businesses. Remember, a little due diligence now can save you from scams and headaches.
Comments