My top tips to avoid losing $$$ in a scam

by | Nov 1, 2018 | Risk | 0 comments

There are more and more reports of small businesses losing money through scams. Crooks are getting smarter, and scams these days aren’t always as obvious as the old Nigerian prince scams.

Recently, I read about a homewares business that lost $10k through an email scam with a ‘supplier’, with no way to recover the funds.

And every week in different Facebook groups I see posts from people wondering whether something is a scam (or worse, that they’ve fallen victim to one).

Common types of scams to look out for

  1. Overpayment scam – where the scammer will ‘accidentally’ pay you too much money, and ask you to refund the money to a different account
  2. Shipping scam – where the scammer will ask to use their own shipping provider
  3. False billing – where you’ll receive an email with a fake invoice to pay
  4. Change of supplier bank details – where the scammer has hacked into your supplier’s email account and asks you to pay money for an invoice into a different account (the scammer’s account)

Real-life example of a shipping scam

I recently received an email which was obviously a scam, and just for the fun of it (and as research for this blog post) I thought I’d play along for a bit to see how it works. This is how it went:

I received the below email enquiry via my website from ‘Peter B.’, which asked for my prices and to check that he could pay by credit card:

“Hi Sales, 
Could you please send me a pricing on your latest organic products. also like to know if it is possible to make purchases with my credit card as your mode of payment. I will be waiting for a response so to proceed with purchase.”

Once I replied with some fake wholesale prices, he advised he had discussed with his wife and they would like to order 50 each of 4 products, totalling $2500. The products were apparently for his wife’s spa in the Norway.

He also emailed to recommend a certain freight company and asked me to email them to get a quote.

I then asked a few questions to better understand how the scam worked, before ceasing contact.

If I’d been naive to the scam and continued, what would have happened next is:

  • Peter would’ve paid me for my products via credit card (which would have been a stolen credit card).
  • I’d have paid the ‘shipping provider’ directly into their account for the shipping invoice.
  • I’d receive a chargeback from the person whose credit card details had been stolen (i.e. I’d have to pay the money back).
  • ‘Peter’ would have made money from me (i.e. the money I sent to the bogus shipping provider).
  • I’d have sent products and not received any money from them due to the chargeback.

Hopefully you can see that there are many points along the way that should ring alarm bells, but they wouldn’t keep doing these scams if no one was falling for them!

Top tips to avoid losing $$$ from a scam

  1. Remember that if it seems too good to be true, it probably is – it’s easy to get swept up in the excitement of someone wanting to place a large order, particularly when you’re just starting out with your natural skincare business. Try to put your emotions aside and think about the situation logically.
  2. Use common sense and look for warning signs – e.g. does the person have an English name but it seems like English is not their first language? How did they find out about you and does it make sense that they want to place such a large order shipped to a foreign address without even receiving any samples? Do they insist on payment by credit card?
  3. Be alert – if a supplier asks you to pay an invoice to a different bank account from usual, give them a phone call (using the number on their website, not in the email) to confirm the new bank details.
  4. Don’t open links in suspicious emails – always check the email address of the sender to see whether it’s from a genuine email address (you can click on it in your email software to see what the real email address is).

What to do if you receive a potential scam email

  • Ignore it – and don’t click on any links.
  • Ask the sender questions – to see if they can answer them legitimately (only if after reading this you still don’t want to believe that it’s probably a scam)
  • Do your research – Google search the email content to see if it is common type of scam. It’s likely you’re not the first person to have been targeted by the scam.
  • Get a second opinion – post in a Facebook group to get a second opinion on whether it’s legit or not (hint – if you’re wondering whether or not it is a scam, it probably is).
  • Never send money on for a customer – even if you think you may or may not benefit financially from it, you could be helping a criminal, and it is illegal to facilitate money laundering.
  • Report the scam to the ACCC – which is exactly what I did for the scam email I received.

And remember – If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

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Hi, I'm Jen

Founder of Skincare Business Foundations, I help ambitious beauty entrepreneurs to confidently launch, market and grow their brands (without the compliance wobbles).


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