What is a scam?
A scam is a dishonest scheme that aims to get money, or something else of value, from its victims.
Many well-known scams are targeted at private individuals or consumers, but there are also scams that target businesses. All sizes and types of businesses can be vulnerable to scams. The losses to individual victims range from a few tens of pounds up to millions.
If a business understands its own vulnerabilities and can recognise a scam for what it is, it can reduce its risk of being caught out.
Scammers use persuasion techniques that are well-known to good salespeople. Many of these techniques are used quite legitimately by genuine businesses, but in the wrong hands, they are used to draw victims into a scam. The following techniques are commonly used by scammers.
The ‘good cause’
Often, a scammer will try to associate their offer with a good cause, such as a local charity or school, a hospital or a social objective (such as drug awareness or crime prevention). Businesses can easily be drawn into this as they see it as a way to enhance their own social responsibility in the eyes of customers, and as they see the benefit of associating themselves with a popular cause.
Sometimes the scammer will even deceive a ’cause’, like a local charity, into agreeing to be associated with their marketing. When the deception is eventually revealed, enormous damage can be done to the cause and its reputation, as well as to the victims’ businesses.
The appeal to authority
Scammers will appear to associate themselves with individuals or organisations that are highly respected, well-known or in a position of authority. This can make victims feel more comfortable about agreeing to hand over their money.
For example, advertising scams often claim to be connected with, or approved by, police, fire or health services. Sometimes scams will make reference to Government or local authority schemes, or to new legislation, in order to make their offers appear genuine.
Similar techniques include celebrity endorsement and references to trade associations or large companies.
Getting into your house
It is quite common for scammers not to demand money during their first interaction with their victims. Parting with money is quite often a step too far at this early stage, even for those who eventually do fall victim to the scam.
Typically, scammers will seek just a small, non-financial, commitment to begin with. A mere expression of interest or response to an email may suffice. Once the target has taken this seemingly innocent step, they have in their own mind associated themselves with the scammer’s enterprise. When the demand for payment eventually comes, this earlier commitment makes it harder for the victim to resist following through by handing over their money.
Scammers may pretend that their offer is limited, either in volume or in time, so as to elicit a quick decision before the victim has had time to reflect on it. When selling advertising space, a scammer may claim that they are offering the last slot in a publication, or even that they are trying to fill a gap created by a cancellation before a print deadline. When a busy business is faced with a rushed decision, it is quite likely that the wrong decision will be made.
If an offer is genuine, then there is no deadline so rigid or so tight as to exclude a period for reflection before you make a commitment.
In all but the very smallest businesses, incoming enquiries may be picked up by more than one person. Scammers can exploit this fact by making an initial approach to one person in the business and then following up with another person. It is easy for them to lie to the second person that the first person has agreed to something. Although the scammer may have recorded the call, the recipient is unlikely to have done so. The victims can lose confidence in their position and start to believe that they might have made an agreement to the point where they believe they have no option but to pay up.
A twist on this method is the ‘authorisation scam’. An initial call is made to the target business and the scammer asks for the details of two people who can authorise an advertisement to be placed. The scammer then calls one of those people, saying that the other person has provisionally booked the advert, and asking for authorisation. Often, the victim accepts the story at face value without speaking to the other person and authorises the advert.
Attempts to distract you
Scammers are clever at making sure that the important terms of an agreement are both communicated to, and ignored by, victims. Telesales scripts can be designed so that they include information which is audible in a recording. But the recipient of the call has no recollection of it whatsoever. Written contracts are designed to lead victims’ attention away from the all-important small print. They do not realise what they have agreed to until it is too late. A sales representative may ask a victim to sign to ‘express their interest’. The victim then finds that they have signed a seven-year lease agreement. In such circumstances, it can be difficult to prove what was said in the heat of the moment.
Look out for the use, and misuse, of persuasive sales techniques. You should also be aware of warning signs that can indicate that an offer is likely to be a scam. None of these signs are totally reliable, as scammers make efforts to conceal or avoid them. However, it is worth looking out for them.
Making telephone calls
Many business scams are perpetrated through telesales. Without a record of what has been said, phone calls provide an ideal opportunity for scammers. They can claim that an agreement has been made.
Do not agree to place an advert over the telephone unless you are absolutely happy with the publisher with whom you are dealing and what you are being offered. Insist on seeing written details and a copy of the publisher’s full terms and conditions before placing an order.
Some victims receive a string of calls that become increasingly threatening and abusive. Try to keep a record of such calls, including the time, date, name of the caller and a note of what was said. By law, any callers should identify themselves and the company from which they are calling.
Be particularly wary if the initial caller transfers you to someone else during the call. Always ask the next person you speak to for their name, the name of the company, which department they work in and their contact number. If the person you are speaking to cannot or will not provide these details, or if they become abusive, end the call straight away.
You may be able to request a copy of a recording of a call if it is claimed that one of your employees has placed a definite order. However, some rogue publishers have been known to edit recordings to their own benefit before sending out copies. Consider signing up for the Corporate Telephone Preference Service to cut down the number of unsolicited marketing calls your company receives (see ‘Be prepared’ below).
Letters and emails
Some business scams come by letter or email. These documents may contain what looks like a simple call to action without any obvious commitment. For example, a request for the victim to check that their details are correct, then sign and return. On closer inspection, the document turns out to be a long-term and/or expensive contract.
In some scams, the quality of the letter is poor, with grammar and spelling mistakes. You may notice poor alignment and layout. This is particularly likely with advance-fee fraud scams.
Some scammers, particularly those operating advertising and directory scams, operate in the open. They use genuine company registration and genuine contact details. Scammers are reliant on an expectation that they will not be caught or challenged often enough to cause significant damage to their business model.
Other scammers go to great lengths to avoid being traced or caught. Typically, they will use ‘disposable’ email addresses from large providers of free internet email services. Their phone numbers will also be redirected. They are unlikely to relate to any physical location even if they look like they have a UK area code. However, these same scammers often ‘borrow’ a postal address, company name or registration from a real company. This is to make themselves look credible. They know that most customers will not write them letters or visit them. It does not matter to them that the post goes to the address of the real company instead.
Where scammers are operating in the open, they often accept the same payment methods as any legitimate business. Other scammers, including those operating an advance-fee fraud, are unlikely to accept payment cards. Instead, they will either ask for payment by a hard-to-trace wire transfer or directly to a UK bank account. Where a bank account is used, this usually belongs to a ‘money mule’ who is also an unwitting victim of the scammer.
The business receives a call from a telesales agent who falsely claims to be from a legitimate supplier that the company has used before. Contact details are often obtained from genuine suppliers or publications. If the targets of this scam express an interest, they are transferred to another person, allegedly in a different department. Victims often agree to place an advert or buy a product because they believe they are dealing with a supplier or publisher they have used before. Only when the invoice arrives, and they do not recognise the company name, do they suspect anything.
If the victim tries to contact the supplier, they are usually told that the call was recorded and that this is evidence of a ‘verbal contract’. The conversation with the first agent (during which the victim has been deceived as to who they were doing business with) is never recorded. Only the conversation with the second agent who has actually done the ‘selling’. The caller is careful not to mention the name of the company that they represent.
The target business is contacted by phone or letter. The victim is asked if they wish to place an advert in the next edition of a publication in which they are falsely informed that the business has advertised before. It is likely that there was no previous edition. In some instances where the approach is by letter, photocopies of adverts taken from (for example) business directories are included to lend an air of authenticity. Many victims authorise the ‘repeat advert’ without checking any further.
For all your dispute resolution needs, please do not hesitate to contact our experienced dispute resolution team at Bond Adams LLP Solicitors. You can contact us on 0116 285 8080 or email us at email@example.com.