Small business urged to outsmart the scammers

21 June 2013

The Australian Competition and Consumer Commission and WA Small Business Development Corporation are hosting an event today in Perth to warn small business about the dangers of scams. The event is part of the Australasian Consumer Taskforce’s National Fraud Week.

Dr Paull Weber from Curtin University will present his research into online scams, which shows that small businesses can spend up to 100 hours dealing with the consequences of a scam. Some 70 per cent of the 291 small business survey participants wasted time or money thwarting a scam attempt and 12 per cent lost money to a scam.

ACCC Deputy Chair Dr Michael Schaper said small business operators can be easy targets for scammers as they have fewer resources and are often pressed for time.

“Small financial losses to scammers can have a big impact on the viability of a small business,” Dr Schaper said.

Western Australian Small Business Commissioner, David Eaton, says scams often succeed because they look so realistic or try to take advantage of a busy office environment.

“We urge small business owners to implement preventative measures so staff members are aware of scamming behaviour,” Mr Eaton said.

The ACCC’s 2012 Targeting Scams Report revealed that false billing scams are the most reported small business scams, with more than 2,500 complaints and $560,000 lost.

“One trick popular with scammers is to send businesses a subscription form disguised as an outstanding invoice so they sign up for unwanted and continuing advertising services. They rely on business operators having lots of paperwork to process, with little time to check,” Dr Schaper said.

“Online shopping scams increased by 65 per cent in 2012, affecting both buyers and sellers and overpayment scams in particular are an easy trap for small business.”

Overpayment scams work when a scammer responds to a seller’s ad with a generous offer and then ‘accidentally’ overpays. The scammer will ask the seller to refund the excess amount by money transfer in hope that the seller will transfer the money before they discover that the scammer’s cheque has bounced or that the money order was phony.

“The seller will lose the money, as well as the item they were selling if they have already sent it on to the scammer. Common products that scammers target include used cars or boats, and electronic items such as smart phones, tablet devices and laptops,“ Dr Schaper said.

Tips for small business:

  • Keep your filing and accounting systems well organised. This will make it easier for you to detect bogus accounts and invoices.
  • Never provide personal information and banking details to anybody you don’t know and trust.
  • Make sure the business billing you is the one you normally deal with and ask for the name of the person you are speaking to and who they represent.
  • Never give out any information about your business unless you know what that information will be used for.
  • Do not agree to offers or deals straightaway. Always ask for an offer in writing and consider getting independent advice if the deal involves money, time or a long-term commitment.
  • Ensure that you have clear procedures for verifying, paying and managing accounts and invoices.
  • Install reputable computer protection software and a firewall and keep them up to date.
  • If you become aware of a scam, let other people and your industry association know about it.

The Targeting Scams Report is now available. For more information on how to protect yourself from scams, visit

The Small Business SCAMS Report from Curtin University is available at (PDF).

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