Avoid the Dummy Invoice Scam

Small business owners are more vulnerable to scam artists than ever. Although we’ve developed new technology to help safeguard our commercial ventures, scammers are hard at work on their own technological developments. The dummy invoice scam is extremely simple, which is why it can fly under a small business owner’s radar.

What is a dummy invoice scam?

According to Gwen Moran, the dummy invoice scam is one in which a scammer uses fake invoices to trick small business owners into paying the wrong individual. It is often an “inside job” perpetrated by an employee who has easy access to accounts payable data.

The scammer finds out which vendors a small business pays on a regular basis, such as outsourced computer technicians and merchandise suppliers. He then drums up a dummy invoice that is almost indistinguishable from the real thing. The difference? A dummy invoice scam lists the wrong payment information.

Why are small business owners vulnerable?

Running a small business is a stressful, time-consuming job, and sometimes little details get overlooked. The accounting department, or the business owner himself, might sift through hundreds of invoices every day, so many that they all begin to look alike. With a dummy invoice scam, the scammer counts on the business not to pay attention when filling invoices.

The dummy invoice scam will use documents with the actual vendor’s letterhead, logo, contact information and other details. This makes it difficult to catch, especially if the individual responsible for accounting doesn’t check account numbers against previous invoices. It might be as simple as cutting a check to the wrong individual.

How can you protect your small business?

To avoid the dummy invoice scam, it is essential for small business owners to set up safeguards against fraudulent activity. Accounting professionals should be taught to properly vet each invoice that crosses their desks, from the address of the vendor down to the name on the outgoing check.

Additionally, small business owners should know their vendors and keep track of when invoices are filled. A dummy invoice might arrive on the heels of a legitimate one, so an additional invoice should set off immediate warning bells. Call the vendor and verify the invoice number as well as the amount and the payable address.

If you find that you are the victim of a dummy invoice scam, call the police. This constitutes fraud, and unless you are dealing with a very professional scammer, it might be possible to track the perpetrator and prosecute. Of course, it is always possible for a scammer to cover his tracks, but a simplistic scam like this one often indicates an amateur.

The dummy invoice scam can bleed a small business of thousands of dollars a year if it goes unnoticed. Don’t assume that every invoice you receive is legitimate, and make sure your accounting department is aware of the threat.

Source:

Gwen Moran, Green Eggs and Scam, GwenMoran.com