Since the recent floods there has been a rise in the number of scammers claiming to be fundraising for flood victims. You should be extremely cautious and conduct research before you agree to anything. It is important to know how to detect the scammers; who rely on the fact that you are very busy and are more likely to provide information to help them carry out their fraudulent activities. Scammers target businesses in a range of ways and you need to be vigilant so you are not scammed. Due to the increase of scammers as a result of the floods we thought it timely to mention some of the different ways in which your business can be scammed. It is important to be aware that these methods are constantly in use, not just in relation to flood donations.
Examples of Scams
Telephone scams (telemarketing fraud)
Scammers who call your office via telephone and use all sorts of tricks to convince you that you already owe them money. Some may even claim to be from a government agency.
Invoice fraud (false billing)
Invoice fraud targets businesses by telephone, mail, email and fax. The scammer will supply you with an invoice for products or services you have not ordered or received, hoping, because you are busy, that the invoice will be paid.
Advertising and directory listings
A representative from a magazine or directory calls or faxes and asks for you by name and then falsely claims that they spoke to you several months earlier and you agreed to purchase an advertisement or a directory listing.
Business opportunity scam
Business opportunity scams are offered through spam email, a phone call or letter, offering you a way to make a lot of money quickly. Odds are it’s a scam if you are required to make an upfront payment or have to recruit other people to the scheme (pyramid schemes).
Fax back scam
A fax back scam is an unsolicited fax that offers your business something – all you have to do is send a fax back to a premium rate number (starting with 190). Premium rate faxes can be charged at more than $6 per minute. The scammers make sure your fax will take several minutes to get through.
Domain name renewal scam
A domain name must be renewed every couple of years. Domain name renewal scams can work in one of two ways. You might be sent an invoice for a domain name that is very similar to your current domain name but might for example end in net.au instead of com.au – the scammer hopes that you don’t notice the difference and just pay the invoice. Alternatively you could be sent a letter that looks like a renewal notice for your actual domain name, but is from a different company to the one you registered your domain name with. Some domain name scammers will claim they have had people asking to buy your domain name with different international web address endings (eg .in, .uk, .ca). They then encourage you to purchase multiple domains, by saying they are giving you priority for ownership over these buyers. Generally there is no other buyer and the company is just looking to make money.
Scams frequently cross national boundaries so business owners need to be on the alert for suspect deals offered by overseas organisations. Especially look out for ones that claim they need somewhere to deposit their cash in Australia, and in return for you giving them your business’ banking details to access the account they will give you some of the money.
Ways to avoid scams
Scammers thrive on uncertainty and target poorly organised businesses. Some ways to avoid being scammed include:
• NEVER give out your bank details, passwords, logins etc. It will never be asked for or required by legitimate sources
• Don’t approve purchases over the phone – get them in writing first and keep records of all payments
• Check the details of any new trader before doing business including their ABN, company registration, lodgement of company documents and also look at the banned or disqualified directors’ register
• When considering advertising, ask for copies of previous editions and check the publication’s circulation
• Never give out or clarify information about your business unless you know what it will be used for
• Carefully read all the terms and conditions of any offers
• Limit the number of people who can approve spending
• Be careful of scammers who use existing company names and names that sound similar to legitimate organisations but which don’t actually exist.
• Be wary if the business offering the opportunity only provides a post office box address.
If you want your business to help flood victims or any other group requiring financial support, you should donate through official authorised charitable organisations to ensure the funds go where they are needed. As a precaution it is usually a good idea to donate to an endorsed organisation. You will find that most charities are endorsed, so it is a good idea to donate to an existing, well-established organisation. This will help to ensure that your funds are passed on to those in need, and not risk it being misdirected by scammers who are taking advantage of this terrible situation and our generosity. It will also see that you are able claim the total deduction for your donation that you are entitled to in your tax return.
Our thoughts are with all those who have been affected by the recent floods. If you have any questions regarding claiming deductions for donations to emergency relief funds or any other tax or accounting query please do not hesitate to contact us. Here at The Quinn Group, our team of experienced accountants and lawyers can assist your businesses with a range of tax related issues. For more information submit an online enquiry or call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.