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Grow Your Business Security

Online Directory Scam Targets Small Businesses

Online Directory Scam Targets Small Businesses
Credit: Wang/Shutterstock

While online directories can be a good way to promote your business, don't jump at every opportunity to get listed.

The Federal Trade Commission is warning small businesses of a new scam in which someone calls to confirm contact information for a directory. However, rather than it being a free directory, businesses that pass along their information are being sent invoices for hundreds of dollars for a listing in an online business directory.

The scam didn't always stop with the invoice, according to the FTC. The agency said that when business owners disputed the bills, the scammers pointed to recordings of their initial calls — sometimes using edited or altered versions — to try to prove that their employees had approved the charges.

"Businesses or organizations that still refused to pay got harassing calls telling them they'd owe interest and legal fees and would be reported to credit reporting agencies," the FTC wrote on its website.

Sometimes the scammers went even further by pretending to be debt collection companies in order to collect payments for a promise that they wouldn't call again, the FTC stated.

"In the face of threats, many people just paid," the FTC wrote.

The FTC is currently investigating three telemarketing agencies in Canada that have been targeting U.S. small businesses with this type of scam. The telemarketers were doing business under the names Your Yellow Pages and OnlineYellowPagesToday.

To protect your business from this kind of fraud, the FTC offers several tips:

  • Train your staff. Educate your employees about how these scams work.
  • Inspect your invoices. Depending on the size and nature of your business, consider implementing a purchase order system to make sure you're paying only legitimate expenses. At a minimum, designate a small group of employees with authority to approve purchases and pay the bills.
  • Verify to clarify. Check a company out for free at bbb.org, the Better Business Bureau's website, and read the BBB's report on them. Also, try doing an online search using the company name and words like "complaint" or "scam."
  • File a complaint. If you're getting bogus bills, file a complaint with the FTC and with the BBB. Complaints help shape the FTC's law enforcement agenda, so it's important to sound off when you spot a scam. Concerned about business directory fraudsters' threats to tarnish your credit if you don't pay? Many will simply drop the matter — and may even provide a refund — if they know you've complained. If the scheme involved the U.S. mail, submit a Mail Fraud Complaint Form to the U.S. Postal Inspection Service. You also can alert your state Attorney General.

Originally published on Business News Daily

Chad Brooks

Chad Brooks is a Chicago-based writer who has nearly 15 years' experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.