To Pay or Not To Pay, the Fake Invoice Scam

Press release from Better Business Bureau

ATLANTA – While most scams target the most vulnerable consumers, the fake invoice scam targets businesses and accounted for about 1,143 scams claims in 2018, according to the Better Business Bureau’s annual Scam Tracker Risk Report findings.

Released on Wednesday, March 6, the new risk report ranks fake invoices as the 13th most risky scam.  However, it is the riskiest scam for businesses, as the other riskier scams affect individuals rather than companies. The BBB Scam Risk Index is a three-dimensional measure of the intersection of exposure, susceptibility, and monetary loss.

“Across the United States each year, businesses lose lots of money by paying fraudulent bills for products and services that they never ordered and often never receive,” said Brian Catania, President and CEO of the BBB Metro Atlanta, Athens and Northeast Georgia. “It is estimated that companies sustain losses totaling in the millions of dollars annually because of these schemes.”

Operators of these schemes target businesses in order to obtain information that will be useful in making the phony bills look more legitimate. This information might include names of supervisors and managers and key telephone numbers within the company. After sufficient information is gathered, the schemer will send a bogus bill to the victim.

The amount of the phony invoices is usually small enough to avoid raising the suspicions of those in the target businesses. In fact, the new BBB risk report states that the median amount of loss involved is $250. Some of the phony bills may actually be stamped as “Past Due” or “Final-Notice” in order to pressure the target into making out a check quickly without careful investigation.

 

TYPES OF BOGUS BUSINESS SOLICITATIONS

Solicitations Disguised as Invoices:
A common variation of the bogus bill scheme is the issuing of invoices that are really solicitations for goods and services that were never actually received. Since these solicitations are designed to look like an actual bill, businesses mistakenly send in checks as if they were routine payments and may not even receive the merchandise. Efforts to trace the fraudulent firm that issued the “invoice,” more often than not, prove futile because the companies close down operations quickly once they have made money.

Phony Checks:
Businesses may receive unsolicited checks in the mail. When cashing one of these checks, a business may be charged for something it does not need or want such as Internet access or membership in a Web directory. It is important to read both the front and the back of the check to make sure that it does not include any charges.

Phony Yellow Pages Directories:
One of the most commonly used methods of advertising is the Yellow Pages business directory. Over the past few years, an increasing number of companies have been sold phony yellow pages advertisements. According to the Yellow Pages Publishers Association, businesses lose more than $500 million each year because of these schemes.

Probably the biggest misunderstanding lies in the use of the famous “walking fingers” logo. Although originally devised by AT&T, the logo was never a registered trademark and is now in the public domain. In fact, virtually all Yellow Pages directory companies use the “walking fingers” logo, including all the baby bells. Customers, seeing the familiar logo, assume that the bills they receive from the fraudulent yellow page directories are actually authentic. In addition, many of the fraudulent Yellow Pages companies include in their solicitations the actual clipping of the target company’s ad from an authentic Yellow Pages directory. The target company recognizes the ad previously run in the Yellow Pages and erroneously assumes it is simply renewing its account.

 

What can you do to keep your business from being a victim:

 

  • Read all invoices and solicitations that are sent to your company carefully.
  • Channel all invoices through only one department in your company.
  • Clear all invoices with the appropriate executives.
  • Familiarize yourself with the format of bills regularly sent to you by other companies.
  • If you do receive a bill that may appear to be from a legitimate company, look it over carefully for the name and location of the company sending the bill.
  • Do not be alarmed by language indicating you must pay the bill or that an unpaid bill will be forwarded to a collection agency. If your business did not order or place the ad with the company, you are not responsible for paying the bill.

 

If you discover that someone is trying to con you with an employment “opportunity”, immediately report it to BBB Scam Tracker and the Federal Trade Commission.

 

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