What types of fraud should businesses watch out for?
Many of the same types of common scams that affect individual consumers are also used to target businesses. Business identity theft and fake check scams are common. Businesses also deal with fraud that specifically targets certain industries, like fraudulent invoice scams and patent assertion fraud.
What is business identity theft, and how can I prevent it?
Business identity theft is similar to individual identity theft. Scammers use sensitive information to open accounts in your company’s name. Business identity theft can also lead to data breaches and other harm to your customers, potentially resulting in legal issues and shattering your company’s reputation. Scammers may even file fraudulent documents to hijack your business account with the Colorado Secretary of State.
One of the oldest scams out there, fake check scams work when the scammer writes a bad check to a business, only to return soon after asking for a refund–all before the check is actually cashed. Once the business cashes the check, it bounces.
Fake check scams don’t just target large businesses. People who own small businesses like childcare providers, mental health professionals, and other sole proprietors are also targeted in fake check scams.
Remember, the responsibility for ensuring a check deposited with your bank is on you. The bank has no obligation to reimburse you for any money you lose when the check turns out to be fake.
What is patent assertion fraud?
Patent assertion fraud occurs when someone claims to own a patent they do not actually own, and attempts to collect on licensing fees for the use of the patent.
Colorado state law prohibits certain communications around patent assertion. If your business receives a letter or email with a patent assertion that contains the following, it may be illegal:
False claims that a lawsuit has been filed.
The sender is not the patent owner.
The patent in question was deemed invalid or unenforceable.
The letter seeks compensation for an expired patent.
No patent owner is identified.
No patent number is included.
No patent infringement is identified.
If you receive a patent assertion letter that does not include documentation, if the letter claims other similar businesses have already entered into licensing agreements, if there is a false sense of urgency to act such as an offer of a discounted licensing rate, if the response deadline is very short, or if the letter includes any threats of suing you with no actual lawsuit filed, you should file a report with the Colorado Attorney General’s Office.
What are fraudulent invoice scams and how do I spot them?
You may receive an official-looking invoice claiming you owe money to a vendor, but that doesn’t mean you should pay it. Fraudulent invoices can be for any business services, including communication and information technology, advertising, office supplies, equipment maintenance, and more.
You may be able to spot fake invoices due to typos, weird fonts or formatting, logos that don’t look right, similar to common signs of spam emails.
As a business owner, it’s your responsibility to be on top of any outstanding services so you know if an invoice is real. Train your staff to be thorough when examining invoices, and always use phone numbers and contact information from your records or from online searches, not from the fraudulent invoice.
How can I get my money back if I’m defrauded?
If you’ve sent money to a scammer, contact the company you used to process that payment immediately. Reporting fraud to your bank, credit card company, the company you bought a gift card from, a cryptocurrency exchange, or any other payment processing company can help reverse it.
