Photo Dr Michael Schaper, ACCC Deputy Chair

By Dr Michael Schaper, ACCC Deputy Chair

The Australian Competition and Consumer Commission is warning about false billing scams after a 45 per cent surge in complaints and almost $725,000 reported lost in 2013.

False billing scams attempt to trick busy businesses into paying for unwanted and unauthorised listings or advertisements in magazines, journals or business directories.

Often a scam is disguised as an outstanding invoice to get the business to sign-up for unwanted advertising or office supplies. Another common ploy involves sending invoices for the renewal of a non-existent domain name registration. In some cases, false bills and invoices are followed-up with phone calls demanding payment or legal threats.

Damage done

Our recent scam activity report found false bills and invoices are the most common scam targeting small businesses with 3,672 complaints received in the past year. Out of those complaints 12 per cent of businesses reported money lost.

Not only do scams hit small business owners in the hip pocket, they also waste precious time and resources in dealing with the consequences. A survey conducted by Curtin University found small businesses can spend up to 20 hours dealing with the fallout of false billing scams.

Disrupting scams

The ACCC is alive to false billing scams and we have taken action where we can to deter and discourage scammers targeting Australian small businesses. In 2013, 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 that it claimed were affiliated with charities.

Avoiding false billing scams

If you are responsible for accounts or advise small business clients on their financial management the following tips can be used to avoid false billing scams.

  • make sure the business you are dealing with is the real deal – if you receive a form or tax invoice out of the blue, verify who they are by contacting the company directly using contact details sourced independently through a phone book or online search
  • make your business ‘fraud-free’ – effective management procedures can go a long way towards preventing scams. Have a clearly defined process for verifying and paying accounts and invoices, and try to avoid giving too many staff authorisation to make orders or pay invoices
  • don’t be intimidated – do not let anyone pressure you into making decisions involving payments or contracts. If you are unsure, always seek independent financial or legal advice
  • update your IT security software regularly and make sure you use and offer secure online payment methods.

The ACCC and the IPA have also banded together to produce post-it style notes which provide small businesses with a desktop checklist on how to avoid billing scams. The notes will be available via the IPA.

Online resources

To keep up to date visit SCAMwatch.gov.au and sign-up to the radar alerts. The ACCC’s most recent scam activity report is available at www.accc.gov.au.

Lessons learned

  • false billing scams are increasing with more than 3,600 complaints received and almost $725,000 reported lost in 2013
  • false billing and invoice scams most commonly target small businesses with 12 per cent reporting money lost
  • double-checking invoices before paying could save you thousands.

This article was published in the October/November edition of the Public Accountant Magazine