ACCC warns businesses to beware end-of-financial-year scams

Small businesses have been warned by the corporate regulator to remain vigilant and double-check every invoice being paid in order to avoid being scammed for unnecessary charges after nearly $1 million was lost in 2010 to fraudulent billing.

The warning from the Australian Competition and Consumer Commission comes as government agencies and security departments warn businesses to avoid end-of-financial-year scams, which offer cheap tax returns and other services.

ACCC deputy chair Michael Schaper says businesses should keep an eye out for online scams to ensure they are not paying for bills they are not responsible for.

“A lot of scams are online, and this creates two problems: they reach small businesses really quickly, and there is constant pressure on businesses to communicate,” Schaper says.

“There is a psychology at play here, and that’s where you have a busy SME, they see an email, and think “Oh, I’ll just pay.” The other problem is that many of these scams are done electronically and are outside of our jurisdiction.”

The ACCC says the total reported loss for false billing in the 2010 calendar year was $966,844, with scams including sending out invoices for advertising, fake directory listings and domain names.

“Often what you’ll find is that you’ll get what looks like a legitimate email, saying that your trademark or domain name is up for renewal. And your first reaction is to say that you don’t remember when you registered it, and then pay it anyway.

“We also see schemes charging for fake grants, and that happens in places like Canada as well. Of course no legitimate government charges a business to apply for a grant.”

Schaper says businesses need to remain watchful as new scams start regularly, and they often change to target relevant topics, such as scams sent out during the Queensland floods.

“They morph really quickly,” he warns.

The ACCC says businesses should also become familiar with suppliers, keep records of orders and purchases, contact any agency asking for money and in general keep up to date with the types of scams targeting SMEs.

“One piece of advice we give SMEs to have a two-person system,” Schaper says. “Someone deals with the invoices, and then another person vets them.”

“While that is a common business tactic, it’s especially useful when dealing with scams because you’ll have another level of checks there.”

Schaper warns it is SMEs, particularly micro-businesses, that fall prey to such scams as they often don’t have the time or money to properly vet them.

“Scams potentially affect every business, but for micros they may not have sophisticated account keeping systems. So you really do need to use that two-person system.”