How to avoid scams

26 May 2009

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A scam is a scheme designed to con you and your business out of money. They can include anything from legal but underhand sales techniques to fraud. Scammers use a number of methods to target their victims and are increasingly taking advantage of web and email technologies. Many scams are actually based on the same principles but dressed up in different guises. Here, we tell you about the most common types of scam and how to avoid them.

Email and web scams

Email provides scammers with a cheap and easy way of reaching thousands of people. The most popular scams include ‘phishing' and spoof emails and ‘advanced fee' fraud.

Phishing is the practice of sending false email messages to numerous email addresses usually in the hope that you will "take the bait" by responding. Spoofing is the practice of impersonating a trusted email address to send an email message that will illicit a response containing sensitive information.

Advance fee emails claim that the sender has a large amount of money and needs help to transfer it to another country in return for a percentage. If you respond you will be asked for a payment to help the transaction along or for your bank details. Never give out this information.

You should:

Delete any of these emails immediately. Do not reply as this may encourage further contact and you could even be put on a 'suckers' list, which is used by other scammers.
Look out for emails that appear to be from a legitimate source but have inconsistencies in the domain of the sender's email address and any links in the email. Don't click on any links, especially where it requests that you update sensitive information.
Ignore any email message that appears to come from a bank or a similar institution asking you to connect to a website and supply information such as your pin or password. Banks will never ask for information in this way.
If you want to check whether an email is genuine, contact the organisation that supposedly sent it.

These practices can target all of your business email addresses, so you need to make sure your employees are aware of the dangers.

Telephone scams

Cold-calling is a well-known telesales method and is used by many genuine businesses as a legitimate way of finding new customers. However, it is also a tactic exploited by scammers.

A popular scam currently targeting businesses is the ‘publishing' or ‘advertising' scam, where a salesperson will try to sell you advertising space in - or ask you to donate money towards - publications that will apparently help a charity.

Often, the telesales staff will falsely claim that your business has already placed an order, agreed to give a donation or previously supported the good cause.

These types of claim are normally made in the first call and then followed up by a 'confirmation' call where you will be notified of a ‘binding contract' between yourself and the company. Frequently, this is followed by aggressive forms of debt collection.

You should never agree to buy anything that you do not want or be pressurised into paying for something that you've not agreed to, regardless of what the salesperson claims.

Don't be afraid to ask questions, more time to think about a proposition, or to say ‘no thank you' and put the phone down.

To opt out of unsolicited phone calls you can register on the Telephone Preference Service website.

Postal scams

Common postal scams include letters saying you have won a competition that you haven't entered and ask you to pay a fee before you can collect it. However, the prize is either non-existent or worth much less than the fee. Other competition scams involve calling a premium-rate number to claim your prize. The general rule to remember here is that you cannot win a competition you never entered.

Another popular postal scam is the pyramid scheme, where you may be encouraged to send money with the promise of financial reward, or threats about what will happen if the chain is broken. You will never profit from sending money to these schemes, only line someone else's pockets.

To prevent yourself from receiving unsolicited mail you can register with the Mailing Preference Service for free.

If you believe that your business has been the subject of a scam, you need to take steps to stop it from continuing and fix any damage. Depending on the type of scam this may include:

Informing the police if you are the victim of a fraud.
Checking your bank accounts for unexplained transactions and running a credit check on your business for any unexpected changes in your business' credit condition (members of the FPB can do this here).
If a scam appears to have come from a reputable organisation, notifying them so that they can deal with any internal breaches of security.
Making other people aware by telling us about your experience. We can let others know through our eNewsletter and website.

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How to avoid scams

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