Scam reports nearly double in 2011, ACCC reveals – five lessons you need to know

The number of scam reports provided to the competition watchdog doubled during 2011, with online auctions now one of the biggest target sites.

The Australian Competition and Consumer Commission has warned businesses to do due diligence on a potential deal, or risk becoming another statistic. The total number of financial losses resulting from scams was up 35% to $85 million.

Advance fee or up-front scams accounted for 36% of the total reports, while computer hacking scams and lottery and sweepstake scams took up 23.4% and 9.5% respectively.

“I don’t think people need to be scared, but they need to check legitimacy,” deputy chair Michael Schaper told SmartCompany this morning.

“You need to make sure everything is legitimate. Go off the website, look them up elsewhere, and give them a call. Look through search engines.”

There’s plenty to learn from the ACCC’s new results – here are five of the most important lessons you should take away.

Auction scams are growing

This category has seen one of the largest amounts of growth, with 5,012 total scams reported, taking up 6% of total reports.

The scam is simple – you buy a product through an online auction site and it never comes, or is just a lower-quality version of what you thought you were buying.

If you want to stay safe while using these sites, you need to do a few things first. Make sure the site is reputable, ensure the item you’re buying would actually sell for the price you’re paying, and then check if you can track down the person if something goes awry.

You’re also better off staying away from lesser known auction sites. If you stick with the big ones, you’re likely to get support from the site itself is something goes wrong.

Never trust someone over the phone

This is an old one. Someone calls you up, and tells you they’re from Microsoft or another security firm. They’ll tell you that your computer is filled with viruses and that if you give them access, you can buy a security suite that will fix everything.

It’s tempting to agree to this if you’re not computer savvy, but always remember – never agree to something over the phone, if they’re contacting you for the first time.

Research every single charge

One of the biggest categories of scams hitting small businesses is where the scammer will send an invoice for a service you never actually bought. This could be advertising, some sort of B2B service, or anything. They’ll just assume you’re so busy you’ll overlook it.

And many do. These charges aren’t usually for much money, but they add up. Look through every single charge and verify it before paying – you could help catch someone in the act.

Look at the fine details

The growing nature of phishing scams, which represent 6.5% of total reports, means businesses and individuals need to be more diligent about identifying scams.

Scammers will send a letter or email that contains a logo identical to a major company, such as a bank, asking for money.

You need to look at the fine details here to make sure everything is legitimate. Usually, there are some small defects that identify the letter or email as a fake.

And remember, always call up a company if they’re asking you for money and you were given no prior warning.

Up-front payments are never a good idea

By far the biggest category of scams is the advance fee scam, which makes up 36.6% of total reports. This is where a scammer will call you, promising a reward later on if you pay up now. This can include advertising deals, or some sort of promise from Government officials.

Just like the computer hacker scam, it’s never a good idea to promise money over the fun. Hang up, do some research. Request as many details as you can on the phone, and then quantify those with more research.