Bogus Billing Schemes


Across the United States each year, businesses lose money by paying fraudulent bills for products and services that they never ordered and often never receive. It is estimated that companies sustain losses totaling in the millions of dollars annually because of these schemes.

How Bogus Billing Schemes Work
Operators of these schemes target businesses in order to obtain information that will be useful in making the phony bills look more legitimate. This information might include names of supervisors and managers and key telephone numbers within the company. After sufficient information is obtained, the operator will send the bogus bill to the victim. The operator of the scheme hopes that the phony bill will be paid along with a number of other routine authentic bills. The amount of the phony invoices is usually small enough to avoid raising the suspicions of those in the target businesses. Operators of these scams have considerable experience in calculating the most effective dollar amount to ask for, depending on the size of the business and the amount of money it brings in. Some of the phony bills may actually be stamped as “Past Due” or “Final-Notice” in order to pressure the target into making out a check quickly without careful investigation. 

Solicitations Disguised as Invoices
A common variation of the bogus bill scheme is the issuing of invoices that are really solicitations for goods and services that were never actually received. Since these solicitations are designed to look like an actual bill, businesses mistakenly send in checks as if they were routine payments and may not even receive the merchandise. Efforts to trace the fraudulent firm that issued the “invoice,” more often than not, prove futile because the companies close down operations quickly once they have made money. 

Phony Checks
Businesses may receive unsolicited checks in the mail. When cashing one of these checks, a business may be charged for something it does not need or want such as Internet access or membership in a Web directory. It is important to read both the front and the back of the check to make sure that it does not include any charges.

Phony Yellow Pages Directories
One of the most commonly used methods of advertising is the Yellow Pages business directory. Over the past few years, an increasing number of companies have been sold phony yellow pages advertisements. According to the Yellow Pages Publishers Association, businesses lose more than $500 million each year because of these schemes.

Bell Atlantic produces the most widely distributed Yellow Pages directory in New York. While there are legitimate Yellow Pages directories that are not associated with Bell Atlantic, there are also many companies that mail directory solicitations which businesses may mistake for the Yellow Pages directory they normally patronize.

Probably the biggest misunderstanding lies in the use of the famous "walking fingers" logo. Although originally devised by AT&T, the logo was never a registered trademark and is now in the public domain. In fact, virtually all Yellow Pages directory companies use the "walking fingers" logo, including all the baby bells. Customers, seeing the familiar logo, assume that the bills they receive from the fraudulent yellow page directories are actually authentic. In addition, many of the fraudulent yellow pages companies include in their solicitations the actual clipping of the target company's ad from an authentic Yellow Pages directory. The target company recognizes the ad previously run in the Yellow Pages and erroneously assumes it is simply renewing its account.

Questions to ask about the Yellow Pages
There are some basic questions your business should ask itself before placing an ad with any Yellow Pages company:

  • Where is the Publication Distributed? - Some directories claim national distribution. Businesses in New York should carefully consider the weight of a one-line ad in a publication distributed in California. For most businesses, the most effective ads will appear in directories distributed within the business' own locale.
  • How Many Copies are Distributed? - Compare the effectiveness of one company boasting a distribution of 100,000 copies nationally against another company distributing millions of copies on the East Coast alone.
  • What Am I Paying For? - Many bogus Yellow Pages directories only sell single-line listings costing less than $200. Businesses should ask themselves if the listing is worth it. For example, if you own a business phone, you are entitled to a one-line ad in the Bell Atlantic Yellow Pages for free.
  • Have I Ever Heard of This Company Before? - If your business is unsure of a Yellow Pages company or is unfamiliar with one of its solicitations, we recommend that you request a copy of its publication.

The United States Postal Service enforces laws governing mail solicitations. The following guideline should be printed on all solicitations: "This is not a bill--This is a solicitation. You are under no obligation to pay this amount unless you accept this offer." This must appear in 30-point type against a contrasting background. Unfortunately, many companies omit this statement or hide it in the fine print. Companies are not permitted to mail solicitations which include language that may mislead the reader into believing it is an invoice. For example, phrases such as "Pay Now...Amount Due... Remit Immediately" may not be used. Unfortunately, once your money is sent to these operators, it is difficult, if not impossible to get a refund.

What can you do to keep your business from falling

  • Read all invoices and solicitations that are sent to your company carefully.
  • Channel all invoices through one department.
  • Clear all invoices with the appropriate executives.
  • Familiarize yourself with the format of bills regularly sent to you by other companies.
  • If you do receive a bill that may appear to be from a legitimate company, look it over carefully for the name and location of the company sending the bill.
  • Do not be alarmed by language indicating you must pay the bill or that an unpaid bill will be forwarded to a collection agency. If your business did not order or place the ad with the company, you are not responsible for paying the bill.

To prevent your business from paying for an ad or invoice that it does not owe, educate all of your staff -- especially those responsible for paying routine bills -- about the variety of scams involving phony invoices and solicitations.

If you think your business has been a victim of mail fraud, you can file a complaint with the following agencies:

For more information on bogus billing schemes, or to file a complaint against a company operating through the mail, contact:
U.S. Postal Inspection Service
P.O. Box 555
New York NY 10116-0555

For more information or to file a complaint against a phony yellow pages directory, contact:
Yellow Pages Publishers Association
Connell Corporate Center II
Two Oak Way, First Floor
Berkeley Heights, NJ 072922