Getting scammed is something that most people think will never happen to them. However, small businesses are often victims of fraud, especially new business startups.
New, as well as seasoned, small business owners need to be aware of common fraud tactics. The precautions small businesses can take are simple but can save the business large losses.
As discussed in Avoid These 5 Small-Business Scams by Robert Moskowitz, being aware of potential scams is the number one precaution.
The most common types of scams are aimed at entrepreneurs who are looking for a quick way to raise capital. Common scams are funding kits, phantom investors, advance-fee loans, overpayment retainers, and excess-inventory sales.
In all of these scenarios, small business owners are asked for money up front for application fees, processing fees, or premium services. The deals promise government grants, low-interest loans, or investment funds.
Sound too good to be true? That’s because it is.
Small business owners will pay for “services” never to see the promised product nor their invested money.
Before jumping at a great offer, do some checking.
“Banks are in a unique position to have a significant amount of knowledge when it comes to the various scams and frauds that our business and consumer customers experience. Bankers will often ask questions about transactions our customers’ conduct, especially when we think our customer might be the victim of a scam. Don’t hesitate to use your banker as a resource if you have been asked to get involved in a deal that seems questionable,” says Owen Holt, vice president of risk management for Southern Bancorp,