Running a successful business is tough enough without throwing fraud into the mix. According to the Association of Certified Fraud Examiners, small businesses have a fraud rate of nearly 32%. BBB is warning businesses to be suspicious of customers who send checks for amounts much greater than the product or service being purchased and advises them to become familiar with the signs of an overpayment scam to keep from being victimized.
Check overpayment scams are nothing new. They often happen in response to ads or online auction postings. Sellers are contacted by an alleged buyer, who offers to pay for an item with a check. At the last minute, the buyer will often present a reason for having to write the check for more than the purchase price and request the seller to send or wire transfer the excess or place it on a prepaid credit card. When the business’ financial institution attempts to withdraw funds on the original payment, the fraudster’s account is empty. The business or seller does not get paid, and the money wired is gone.
BBB has received calls from contractors who were contacted by individuals who claim they needed work performed on their home. The contractor receives a text for a bid from a “homeowner”. Through email communication, the “homeowner” accepts the bid and even signs the contract. The contractor receives a check for the work to be performed which is more than the agreed upon amount. From here, the scam plays out the same: The contractor receives a request to wire transfer the extra money or place the extra funds on a prepaid card, and the “homeowner” is never heard from again.
“Overpayment scams can take form in various ways”, said Mechele Agbayani Mills, president and CEO of BBB Serving Central East Texas. “Regardless of the mode of attack, however, the end result is the same – the victim is left with an overdrawn account – they might even be held responsible for overdrawn fees and funds and face charges for fraudulent checks. “
The BBB offers businesses this advice on accepting checks from unknown parties:
For more tips on how to be a savvy business owner, go to bbb.org. To report fraudulent activity or unscrupulous business practices, call the BBB Hotline: (903)581-8373.