Mounting scams target busy owners

Christopher Niesche
March 19, 2012
The Age

THE Australian Competition and Consumer Commission received 83,150 reports of scams from small businesses and consumers last year, almost double the year before and more than quadruple the number in 2009, according to its annual scam report to be released today.

More than $85 million in losses were reported, up 35 per cent.

The chairman of the Australian Consumer Fraud Taskforce and deputy chairman of the ACCC, Michael Schaper, said the number of scams was likely to be higher than reported, because many victims were too embarrassed to come forward.

Small businesses increasingly fell victim to real estate scams last year, where criminals offered premises at attractive prices from professional-looking websites. After a business had paid a deposit and a couple of months’ rent, without inspecting the property, they showed up to find it already tenanted and unavailable.

While it might be hard to believe many people would rent premises without inspecting them, Dr Schaper said scammers often tricked the business owner into rushing the decision. ”They’re very adept at creating a sense of urgency,” he said.

Companies and consumers are also being hit by business opportunity scams and unwittingly launder money for criminal groups, by taking money into their bank accounts and moving it to another location, according to today’s report. They are offered the chance to earn money by processing mail or accounts, but told they have to pay an upfront fee for training, uniforms or establishment costs.

Small businesses were particularly vulnerable to scammers because the owner was a jack-of-all-trades and pushed for time, Dr Schaper said. They also liked doing business via email and did not have the checking systems big businesses did, he said.

In this week’s ”Slam Scams!” National Fraud Week campaign, the ACCC is encouraging small businesses not to engage with scammers at all, in a bid to prevent them from being a target in the future.

Scammers were becoming increasingly sophisticated and there was evidence they were starting to sell lists of victims to each other, in the same way legitimate marketing businesses did, Dr Schaper said.

A senior lecturer in entrepreneurship and small business at Western Australia’s Curtin University, Paull Weber, said between 30 and 50 per cent of small businesses had fallen victim to scams. Most lost only a few hundred dollars, but the losses could run into the tens of thousands of dollars.

Dr Weber is conducting a study with the ACCC into which businesses are affected by scams and why. He said preliminary results suggested the most targeted were those with high turnover, such as cafes, pet groomers, financial advisers, travel agents, retailers, IT managers and web designers.

Scammers have relied on the low cost of the internet to contact victims for several years, but many are now turning back to the phone as the cost of international calls drops to a few cents thanks to VoIP (voice over internet protocol).

Phishing – tricking businesses or consumers into revealing bank account details – remains a problem. There was also a slight increase in reports of the false billing scam, where a business receives an invoice for unwanted advertising. According to the ACCC report, these are among the most successful of scams, with a 15 per cent conversion rate.

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