Scamming small businesses and individuals

On two successive working days, I have experienced attempts to obtain bank details via cold calls.

The first call purported to relate to a renewal of insurance for an appliance. We did have such insurance but I thought it was up to date. I was suspicious and thought that if it needed to be renewed we would have received a paper schedule via the post. The caller assured me they were trying to save trees. I told them they could send an email, but they were not interested in my email address and rang off.

The second call was from someone claiming to represent the “Call Prevention Service”. They would prevent cold calls from abroad for a fee of £1.99 per month on a four year contract. Again I was suspicious. I asked “Surely my telephone provider would offer such a service if available?” I was told they worked with all telephone providers.

I asked for a number to call back and was provided with one before they rang off. My research on this number led me to this link, so it seems the police are aware. Whether they do anything about it is another matter, but do be careful with these callers. If anyone else in your business is authorised to deal with purchasing, banking and payment matters, do make sure they are aware too.

Verbal understandings are not contracts

 

coppersIn my business I think it is important to have agreements in writing with my clients so that they know exactly what I will be doing for them in conducting their affairs (and what I will not be doing). I have always said that verbal agreements are no use especially when the parties fall out or one side has a perceived issue.

Many of us look after family members or agree financial arrangements with them, and somehow it seems less comfortable to ask them to enter into a written agreement. Yet why should they be any different? They are people who may have ideas you have not fathomed.

So I confess. My wife and I entered into a financial and verbal understanding with a family member ten years ago, and when it came to the crunch last year, he reneged on the agreement. That has cost us a lot of money. That is the point: where money is involved, people may have an eye for the main chance when greed, and other motives unknown us, kick in.

If you are relying on a family member to repay you or at some stage meet certain financial obligations, have it all in writing no matter how uncomfortable it makes you feel. That is an insurance we all need.

As for us, we have again learned from experience. Trust no one where money is concerned, and get it in writing when you need to. Onwards and upwards!

 

Special offers to be taken with a pinch of salt

Obverse of the Series 2006 $20 bill
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Do you receive at least daily loads of emails offering you the secret of how to make vast amounts of money a day for working only four hours a week? Do you get telephone calls from overseas suggesting you invest in some penny stock that is about to make it big? Are you sometimes approached by quite good business friends with the offer of some wonderful moneymaking scheme they have heard about and are gullible enough to try to rope others into?

These are all penalties of being in business and having a web presence. We give the world opportunities to contact us, but we are in business and cannot filter out the chancers except the serial spammers.

Now, I don’t doubt that some of the tales that are woven have some basis in truth. An experienced day trader may make a lot of money in four hours though it won’t be without investing a lot of time in watching the markets even when not dealing. There is a risk of losing of course, but that is just glossed over in the sales patter.

The penny stock offers are known as “boiler-room scams”. I don’t know about boiler-room, but most of these people sound as though they are calling from the bottom of a well or a Chilean mine, no doubt due to roundabout routing of their calls to avoid being traced.

The other week I had occasion to examine an apparent way of saving large amounts of tax. In this case there was an outside chance it could work before the tax authorities leaped on it, but it would have required a very bullish taxpayer to try it and you could bet your bottom dollar that the offshore providers would have disappeared long before the angry taxpayer turned on them.

The truth is that all these “opportunities” pander to the greed of those drawn in. There will always be money and probably quite a lot of it to be paid up front. That is money which most likely will never be seen again.

Take care out there, and remember that if something sounds too good to be true…

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Budding entrepreneurs should take care of their redundancy payments

Cheque sample for a fictional bank in the Unit...
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With many firms downsizing there are many people, often in their late forties or into their fifties who find themselves unexpectedly with time on their hands and also a fat cheque as part of their compensation package. Some may have several tens of thousands in their bank accounts.

Few are happy to retire and put their feet up. Spending more time with the family may be a convenient euphemism for politicians who have been kicked out of office, but actually for people with active minds, boredom soon sets in. It is then that there is a danger of being lured into something which may eat some or all of that redundancy payment without any lasting benefit.

There may be an attractive offer for a franchise with “guaranteed income”. There may be an alluring advert in a weekend newspaper offering training as a “consultant”. There may be an offer of high returns from a property business. All should be viewed with perhaps not suspicion, but at least with healthy scepticism.

If you are looking at an opportunity to start a business:

  • Think whether it would suit your skills
  • Consider whether you can meet the demands on your time
  • Ask for references from other people who have gone down that road
  • Check that the income suggested in the blurb is being received by those other people (they may be embarrassed but if they are you have your answer).
  • Consider whether any turnover-based levy from “Head Office” will eliminate any profit unless you work 24/7.
  • Remember that if something seems too good to be true….

You may find just the right thing, but do be very careful and choosy. Keep your money until you are absolutely sure you are doing the right thing. Remember that very plausible scammers roam amongst us. Have you tripped over any?

(C) Jon Stow 2010

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Some things start-up businesses need to know about

When we start our business, most of us have a good idea and a plan to carry it out. Everyone should have a plan, but we need to be flexible enough to alter it according to circumstances. What no one tells us if we don’t ask is about all the mistakes we might make which can cost us money. It is always useful to be armed with a few tips, so here are some things I have learned.

1. When thinking about advertising and marketing, consider the best strategy to promote your business. What do others in your area of business do, and does it work for them? I thought that it would be useful to be in Yellow Pages (or the on-line equivalent, Yell.com). It cost me a fair amount of money until I worked out that these sorts of directories are really only effective for tradesman and specialist retailers. This leads me to:

2. You may find that one of the best ways to find new business is to go out networking. This involves getting out of your comfort zone a little, especially if you have been an employee and you are an introvert.. There is plenty on this site about networking and vast amounts of information available on-line, so look at BNI and other breakfast groups, and think what most suits you in terms of networking: formal, less formal, morning, lunchtime and evening.

3. Do not be afraid to ask for advice. If you have a problem, it is not a failure, just a learning process. Most people will be happy to make a suggestion.

4. Going on from item 3, many of those who can help are in your business. Do not look on them as competitors. They are colleagues who have the same issues.

5. There are quite a lot of nuisance telephone callers. I do not mean the cold callers in general. They have a job to do. However, deal firmly with the really pushy ones, because they will often try to sell you something you don’t need. If the product or service sounds useful, do some research and call back.

6. Never give your credit or debit card number to a cold caller. It sounds obvious, but it is an easy thing to do in a weak moment.

7. Some cold callers are out-and-out scammers, or crooks. They will try to sell you advertising in a police or fire service magazine or in a magazine of a charity, or ask for a donation to help the poor children in your area. Any of these is a red flag. The magazines probably don’t exist or if they do, they have nothing to do with the scammer. The charity for children will be a fiction too and someone has your card number if you are not careful. If you are suspicious, ask for a number to telephone back, or ask for the name and address of the company calling and the name of the owner. Any resistance to this and you know you were right to be suspicious. I fell foul of this trap once, too.

8. Do not borrow money against your house, and if you do borrow make sure that the payment terms are reasonable and your plan really supports the repayment schedule. Don’t chance it because the worry isn’t worth it.

9. If you are not up to keeping your accounts in apple-pie order, get someone else to help. Do not leave it to your accountant at the year-end because completing a year’s accounts from scratch can be costly. A good bookkeeper is well worth the investment.

10. Make sure you have all the insurance you could possibly need. Of course things shouldn’t go wrong if we are careful, but sometimes they do. If we are insured it should not be a problem, at least in financial terms.

None of us gets everything right. We learn and move on, and we ask for help when we need it.

One thing we can say is that running a business is never dull. What pitfalls have you seen along the way?

© Jon Stow 2010

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Enterprise and risk

I have been talking about risk recently in another context. I was a little dumbfounded yesterday when my Mum said she was told by a family member that she should not sign up to Facebook because there was a risk of identity fraud. Of course there is a small risk. I am indebted to @royatkinson for this link and it could be said that I and all of us who are active with profiles on-line run some risk, but what is life without risk?

The reality is that most small businesses which offer services of any kind and very many who are making and / or selling a product need an on-line presence, and what is more, need to engage with their network. In fact, you need to be on-line to get a network beyond a comparatively small number of friends, which is not enough people to refer you. I was just trying to list how many websites where I have a profile. In terms of business and social networks I have at least ten, and must have more I cannot think of at the moment. I have four blogs: two for business and two personal.

The point is that we have to give some of ourselves in order to be noticed. There are then several steps until we get to business. We need to enhance our reputations (or hope to) and be helpful and give useful information to others, but we need a public presence on-line to get known to further our businesses.

I think the contrast between me and our relative telling my mother not to sign up to Facebook is that I am in business on my own account. The relation has been in a large, safe, cocooned corporate environment for thirty years and is involved in IT security, and she clearly cannot see beyond the small risk to her employer (“more than my job’s worth to access Facebook at work”) to allowing my Mum to have a bit of fun making friends and signing up to her favourite jockey’s fan appreciation society.

There is no success in business without risk. If we are in the front line with our own businesses then we assess the risks and take them if necessary, looking at the likely though seldom certain outcome. It will be hard for those coming out of large corporates in the recession job losses, because they may be too risk-averse to start well in the freelance world. Those of us who have been round the block have learned to live with the risks, which reminds me that I will help my Mum sign up to Facebook next time I drop in.

© Jon Stow 2009

Scammers and traps for start ups

Starting your own business is a big step and one that often isn’t thought through. “Business plan? Goodness me, no I haven’t got one.” However, other difficulties that arise in the first couple of years arise from being too trusting and assuming that everyone with whom you deal is acting in good faith.

I freely admit I was caught out once or twice in the early years. Working for someone else, we are often insulated from outsiders trying to screw us out of a couple of bob or quarters or whatever currency we deal in. When we own the business we are in the front line. So it is that when someone telephones and asks to speak to the person who looks after the marketing and advertising, we will often say quite proudly “you are speaking to that person”. We will then take what the caller has to say at face value.

In my first year or so on my own, I had a call from someone who said he was selling advertising in a magazine which would be in all the local doctors’ and dentists’ surgeries, and which was sent out on a quarterly basis. Would I like an ad? When you start out you are often a bit short of business, so I said I would like to try an advert. They sent me a proof of the ad after we had agreed its content over the telephone, I had an invoice and I paid it by cheque. Guess what? The magazine was fictitious. I don’t mean it was an anthology of stories. I mean that it didn’t exist, and I had been taken for £100 I could ill afford, and of course by the time I realised that the fraudsters were long gone.

I learned a serious lesson from that, and it has stood me in good stead.

Another favourite in the UK and I am sure it has its equivalent in other countries is the Data Protection Agency Fraud. If in the course of your business you hold personal data for your customers or clients you must register with the Information Commissioners and pay an annual renewable license fee of currently £35. However, there are scammers who will write to you and offer to register your business for a much higher sum. They send official looking and quite threatening letters in brown envelopes, and there is an example here.

When I received the first of many such letters, fortunately my alarm bells rang and I checked on the internet where there is a great deal of information about this scam. I am pleased to say that people have been jailed over this racket but usually when the raids take place the criminals are long gone. They use PO Boxes and mail forwarding services and are very clever. If you need to register under the Data Protection Act do it directly to the Information Commissioners after downloading their form online.

Then again there is a charity scam which is quite common. I expect it is intended to be targeted at businesses just larger than micro-businesses, but even if there is just you and you are busy with other things you might get caught out. Anyway, someone calls, and the ploy is clever. They tell you that someone in your office, perhaps you, agreed some months ago when they called before that your business would either make a donation to a charity, or you would take an advert in a charity magazine. They will say something along the lines of “the money will go to a charity to help the disabled children” of your town, which they will name. Now, when they name my village, it is transparently obvious that they are blagging, because I would have heard of any special charity, and our village probably is not large enough to have such a charity of its own. However, if you are in a larger town, say Bradford or Canterbury, it is quite possible that there might be such a charity and a busy person or someone in a larger office could fall for it and give the company credit card number to the caller.

The scam works on credibility. If the caller says someone in your office was called and agreed to the payment some weeks ago your instinct might be not to go against this. Of course no one called before, but the lie is simply to suck you in.

It is stating the obvious, but never, never give a credit card number to someone you don’t know who has made contact with you by telephone. You would not if you had such a call on your private line, but if you get a call on your business line from someone purporting to represent another business or a charity it really would be all to easy to be drawn in. I haven’t done it myself, but have been led to the water from which I refused to drink. I think I know better, but people fall for these and the very credible online phishing scams. The crooks are out to get us. Be careful out there!