Small business owners in Minnesota face challenges every day, from managing budgets to ensuring clients are satisfied with products and services. Unfortunately, having so much to do can leave small business owners susceptible to scammers and fraud.
In fact, this is such a big problem that the Federal Trade Commission, Attorneys General from various states, the Better Business Bureau, and other agencies teamed up for an initiative called “Operation Main Street: Stopping Small Business Scams.” The initiative has already led to 24 actions against alleged scammers who targeted small businesses.
What types of scams and fraud should owners look out for?
As noted in this article on the results of Operation Main Street, fraudulent actions against small businesses have included:
- Scams involving fake invoices
- Phone calls making threats for not paying fraudulent outstanding invoices
- Charging money for materials that no one ordered or received
- Promising discounts on payments or materials that they are not authorized to offer
- Impersonating government agencies and demanding money for various registration fees
Why are small business owners targeted?
There are a myriad of reasons why scammers might target small businesses for purposes of fraud and unlawful financial gain. For instance, small businesses may have fewer (or no) company resources devoted to fraud detection. And small business owners may not be as familiar with commercial and tax regulations or requirements, which could leave them vulnerable to deceit and misinformation.
Further, new business owners may not yet have the experience or capabilities to thoroughly investigate potential scams.
How to address these issues
Being aware of these tactics is one of the most important ways to avoid falling victim to one. Small business owners can also examine their internal resources to determine whether it is possible to earmark specific roles or funding for identifying fraud.
It can also be wise for small business owners to talk to an attorney before they sign anything or agree to pay anything, especially with regard to intellectual property, registrations, or anything involving “supposed” government agencies.
Fraud and scams can cause serious financial and legal problems for a business — especially a small business. Taking steps to avoid them can be crucial to a business’s future and continued success.