Kill bill scams

Advertising in magazines or trade directories, offers to renew office supplies and internet domain names: false billing scams continue to be a pain for small businesses in more ways than one. False billing scams often involve a subscription form disguised as an invoice or late notice which is used to trick a business into paying for unwanted or unordered advertising, stationery or other services. In 2012, more than 2,500 people reported false billing scams to the ACCC, a welcome decrease of seven per cent on the previous year. Likewise, the total reported losses fell to around $560,000, a drop of close to eight per cent. However, there is a sting in the tail with false billing scams increasing their strike rate. The number of people reporting a loss increased to 19 per cent. Not only do scams hit small business owners in the hip pocket, they also waste precious time and resources in dealing with consequences. A recent survey conducted by Curtin University found that small businesses spent up to 20 hours dealing with the fallout of false billing scams – more than two work days lost to the problem. The ACCC is alive to false billing and we have taken action where we can to protect small businesses. In March, Adepto Publications Pty Ltd and two individuals were penalised a total of $750,000 by the Federal Court after they admitted to false and misleading representations. Adepto demanded small businesses pay for unwanted and unordered advertising in publications which it claimed were affiliated with charities.
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In a separate case, the ACCC took action against three publishing companies which contacted small businesses and told them that they had already paid for, or agreed to, advertising in one of the companies’ magazines, when they had not. In September 2012, the Federal Court ordered the publishing companies to pay penalties totalling $400,000, and the companies’ director to pay $100,000 after they admitted to misleading and deceptive conduct, harassment and coercion, and unconscionable conduct. The Curtin University study also found that Australian small businesses are targeted by an array of different scams. Out of the 192 small business survey participants, over 70 per cent may have wasted time and money thwarting a scam attempt, 12 per cent lost money to a scam, and the more online activity and e-commerce a firm undertakes, the higher losses are likely to be. For the first time it also revealed that scams damage business relationships and owner attitudes. The researchers discovered that those who have recently lost money to a scam are losing trust in others. This finding is most disturbing as strong relationships are an essential ingredient for small businesses. The good news from the survey is that many small businesses have adopted their own checks and balances to protect themselves from scams. Simple steps like searching company names and checking for valid street addresses on Google maps are being used. Small businesses are also investing in experienced staff with the right level of industry knowledge to spot requests and processes which don’t fit in with normal business patterns. The research also confirmed that many small businesses have put in place account payment procedures to reduce the risk of falling victim. One small business suggested using a separate debit card with a small available balance for online purchases. Other sage advice included having one person responsible for approving new expenditures and refusing advance payment requests.

Dr Michael Schaper is deputy chairman of the Australian Competition and Consumer Commission

The original release of this article first appeared on the website of Hangzhou Night Net.