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False billing scams targeting small businesses

The Australian Competition and Consumer Commission (ACCC) has again warned small business owners about false billing scams. Targeting Scams Report 2013 revealed a 45 per cent increase in complaints to the ACCC with 3672 reports received.

False billing scams are often in the form of unsolicited advertising and promotional material disguised as an outstanding invoice. For example, the ACCC had received a surge in reports about a fax claiming to be from ‘Yellow Page Australia’ and ‘Open Business Directory Ltd’ that sought confirmation of the complainant’s business contact details. However, the fax was actually an agreement to sign up to an online business directory service charged at $99 per month for a minimum two-year period.

Also many complaints were in the form of an invoice for the renewal of a business’s current domain name registration. However, the domain name will be slightly different such as ‘.com’ instead of ‘.com.au’ or the renewal notice would not be from the company you originally registered your domain name with.

Here is a list of some of the other common scams targeting small business:

  • Overpayment scam – this involves receiving orders for goods and services from you. They then send you a payment by cheque, money order or credit card for far more than the agreed price. The scammer then asks you to refund the overpayment or to pay the scammer’s ‘freight company’.
  • Directory entry or unauthorised advertising scam – this involves sending you an invoice by post, fax or email for a listing or advertisement in a magazine, journal or business register/directory which you did not authorise or request. Another common scam is calling a business to confirm details of an advertisement the scammer claims has already been booked or to ask if you would like a ‘free trial’—it’s only later that you find your business has actually been charged for the advertisement.
  • Office supply scams – the scammer often poses as a regular supplier or customer and claims that your business has ordered or authorised something.
  • Email intercept scam – the scammer gains access to your supplier’s email account and intercepts emails going from you to the supplier and vice versa. This allows them to intercept an email from your supplier sending you a deposit invoice, change the bank account details & forward onto the customer.

Scammers take advantage of busy office environments or accounts departments and thus unfortunately many businesses inadvertently pay these invoices. While the ACCC has successfully prosecuted some of these scams through the misleading and deceptive conduct provisions of the Australian Consumer Law (ACL), it is important to be vigilant as many of them originate overseas and it is often difficult to track the scammer down. This includes having effective procedures in place to verify and process accounts and invoices as well as keeping IT systems up to date to protect you from unwanted material.

If you receive any correspondence pressuring you to make a payment or sign a contract, including threatening you with legal action, please contact our office as we can advise you on whether such demands are legitimate and how to effectively respond to them.

Osman Basiacik

For more information contact Peter English