If you are a web-based business operator in which you act as a reseller, retailer, or procure most of your services online, you have many advantages. You are probably enjoying low operating costs, and are benefiting from the viral nature of web advertising and promotion. If you are an e-tailer, you don’t have to be at a retail location during business hours, and may not even need to keep inventory on hand. If you offer services, you can connect to millions of potential customers more easily than if you had a traditional office, and at any time.

However, there may be some drawbacks for web-based business owners. In addition to startup and operations scams that have to prevented, there are a few business scams that only affect internet businesses. Both the Federal Trade Commission (FTC) and Federal Citizen Information Center (FCIC) warn internet business operators about the following:

• Check Overpayment Scams: Someone posing as a buyer will offer to make a purchase by check, money order, or cashiers’ check that is higher than the cost of the inventory or service being purchased. The “buyer” asks that the seller to wire back or repay the difference after a check or money order is deposited or before it is fully processed. An unsuspecting seller may do this, only to find later that the check has bounced, or the money order or cashiers’ check was counterfeit.

• Advanced Fee Business Scam: This is very similar to the long-standing international letter schemes that ask unsuspecting fraud victims to lend their individual accounts or pay upfront fees to process a major payment in which they will receive a percentage due to their assistance.

However, the way advanced fee scam works can have more variations on the web. An internet business owner may receive email requesting an order for products. A series of completely legitimate transactions occur in which a scammer pays for products using real checks or money orders. Then in the third transaction, an urgent request for a larger order is made, which an internet retailer would fill immediately-- possibly before it is paid, as the owner believes the relationship with the customer is solid. When the etailer attempts to process the new check or money order, it is found to be counterfeit.

Another variation involves “charitable donations”. Someone claims they would like to wire funds to the organization’s account as a donation, and hence requests account information. The scammer then proceeds to fraudulently withdraw funds from the charity account.

Of course, there are logical steps you can take to prevent these and other internet-based business scams from plaguing your business. If you have stated strict policies about the forms of payments or donations you will accept (e.g.: no checks or money orders, or no order fufilment until check clearing), do not bend them for any customer or donor. Additionally, refuse payment that is above the actual fee. You may even want to consider not accepting forms of paper payment.

You can also review the FTC and FCIC websites for tips and tools to curtail internet business scams in your operations.

References

Federal Trade Commission. FTC Warns Consumers about “Check Overpayment Scams”
Federal Citizen Information Center. Advance Fee Business Scams