The competition watchdog has raised the alarm over scams targeting small business and warns online businesses are most susceptible to scammers.
The warning comes as Dr Paull Weber from Curtin University published research into online scams which found small businesses can spend up to 100 hours dealing with the consequences of a scam.
Of the 291 small businesses surveyed for the research 70% wasted time or money thwarting a scam attempt and 12% lost money to a scam.
ACCC deputy chair Michael Schaper told SmartCompany small business operators can be easy targets for scammers as they have fewer resources and are often pressed for time.
“The online businesses are much more susceptible to being approached by scammers than more traditional bricks-and-mortar firms,” he says.
“Scammers love online; it’s cheap and easy as you can reach many people and you only have to reach one or two people to make it worthwhile.”
Schaper says the monetary and time costs are not the only consequences of online scams for businesses.
“If you are trading online and you are scammed online you lose trust in the online process itself,” he says.
“In a sense, it cribs your ambitions and your ability to compete as all of a sudden you are a whole lot more wary about the mechanism that is the main source of growth for SMEs, which is online trading.”
The ACCC’s 2012 Targeting Scams report found false billing scams are the most commonly reported small business scams, with more than 2500 complaints and $560,000 lost.
“I think it’s quite a big problem, and the more commerce that is done online the more potential there is for scams to grow,” says Schaper.
The ACCC has the following 10 tips for small business to protect themselves against online scams:
1. Keep your filing and accounting systems well organised. This will make it easier for you to detect bogus accounts and invoices.
2. Never provide personal information and banking details to anybody you don’t know and trust.
3. Make sure the business billing you is the one you normally deal with and ask for the name of the person you are speaking to and who they represent.
4. Never give out any information about your business unless you know what that information will be used for.
5. Do not agree to offers or deals straightaway. Always ask for an offer in writing and consider getting independent advice if the deal involves money, time or a long-term commitment.
6. Ensure that you have clear procedures for verifying, paying and managing accounts and invoices.
7. Install reputable computer protection software and a firewall and keep them up to date.
8. Use a different credit card or debit card for online that’s separate to all your other accounts so scammers can’t get details to all your bank accounts in one go.
9. Type in the name of any unsolicited invoice you get to Google and add the word scam and that might show up people who have already been hit by it.
10. If you become aware of a scam, let other people and your industry association know about it.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
