Running a business can pose challenges, especially for small business owners with limited resources. Some essential operations require products and services from third-party suppliers or contractors. Unfortunately, these needs can become opportunities for scammers to commit fraud by taking advantage of unsuspecting small businesses.
This type of fraud involves illegitimate vendors who advertise quality products or services and then come up short later or refuse to deliver altogether. These incidents could lead to severe losses, more so when owners purchase products in bulk or hire fraudulent contractors for major projects. These incidents happen often, with some transactions occurring over the phone or via email using forged documents. Authorities advise business owners to take measures to avoid these scams and look out for the following signs:
- Their invoices looked suspicious and did not undergo verification procedures.
- They prefer to transact over the phone.
- They do not provide written offers and references.
- Their mailing address does not match details in local business registries.
- They use free trials or gifts to attract clients.
- They utilize pressure tactics, compelling businesses to buy their products or services.
- They skip formalities, including documentation often necessary to expedite transactions.
These signs should be red flags, especially when facing new suppliers without legitimate references. Business owners should also do due diligence before making high-value purchases from these vendors.
Placing systems and procedures for protection
A small business can thrive when its resources remain intact. Ideally, operations should have systems to protect company assets, whether intellectual property or finances. Business owners could also prevent losses by implementing standard procedures when choosing suppliers or vendors. Doing so can help protect the business from scams and fraudsters while efficiently monitoring money spent on necessary expenses.