If you believe that your business has been the subject of a scam or fraud, you need to take action to:
- stop the fraud continuing
- discover the extent of the damage
- clean up the results of the fraud
The exact course of action will depend on the nature of the fraud, and you will need to take specific advice from the police or legal advisors, but the following are typical things to do or consider:
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Inform the police. The local police may want to involve other forces. There is a National Hi-Tech Crime Unit that may be relevant to some forms of fraud. Take guidance from the police on which, if any, of these subsequent actions should be taken.
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Check bank accounts for unexplained transactions.
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Do a credit check on your business - these are relatively inexpensive and may help to pick up unexpected changes in your business’ credit condition.
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Be particularly careful in making future payments - ensure that these are for goods and services you have actually received.
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If the scam involved penetrating your IT systems or you think that information from these systems might have been used, then the systems themselves may still be compromised. Unless you have particularly good internal IT security expertise, you should consider hiring an IT security specialist to investigate and, if necessary, rebuild or replace parts of your IT infrastructure.
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Prevention is far better than cure. The consequences of a scam can take a lot of time to clear up and they can threaten your business’ viability. See our guide on keeping your systems and data secure.
The following guide may help you check the nature and legitimacy of a multi-level marketing scheme.
Is there a joining fee?
Pyramid selling schemes often have start-up fees which are not for purchasing commercially viable goods or services since most earnings come from introducing others to the scheme.
Does the promotional literature indicate unrealistic earnings (eg “make $100,000 a month legally”)?
Promoters who make unrealistic claims risk breaking the law.
If you answer yes to (1) and (2) then regardless of whether the scheme is pyramid selling or not, you should seek financial advice before entering.
If you contact the lottery operator, you will be asked to provide details of bank accounts and confirmation of your identity. Once interest is shown in collecting winnings, the lottery operators will ask for money in advance to pay costs relating to administration, foreign currency charges or security. This request should send alarm bells ringing as legitimate lotteries do not ask for funds in advance of payout - their operating costs are not deducted from individual prizes.
Scam baiting is the practice of pretending interest in a fraudulent scheme in order to influence a scammer in many possible ways. The purpose of scam baiting might be to waste the scammers’ time, embarrass them, cause them to reveal confidential information which can be passed on to legal authorities in the hope that they will be prosecuted, or simply to amuse the baiter. Scam baiting emerged in response to e-mail based frauds such as the common Nigerian 419 scam. Several websites publish transcripts of correspondences between baiters and scammers. Many scam baiters will also send the scam mail senders to a Western Union office to collect the supposedly sent money and get them to book hotels for them. A few scam baiters have also succeeded in receiving cash from the fraudsters. Other techniques includes, giving the scammer a long, silly questionnaire to fill out filling up their inboxes with large attachments making Nigerian scam mailers call the baiters back on the telephone, in order to waste their time and money hacking into the scammers email accounts in order to find their victims addresses.
