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Beware of Small Business Scams

Beware of Small Business Scams

Whether you’re a small business, medium-sized organization or non-profit group, one thing is for certain: there are numerous fraudsters—both online and off—who would be happy to relieve you of your money. Fraud directed towards small businesses is so common, in fact, that the Federal Trade Commission (FTC) has produced a free booklet (available for order here) outlining the most common tactics. The following scams are included.

Directory Listing Scams

If you receive a phone call from a business to “verify” or “confirm” your company’s information for listing in a business directory, you may be experiencing one of the most common scams. Fall for it—and provide the information the caller requests—and you’re then likely to receive invoices for listings in directories that don’t even exist. If the employee who pays your bills doesn’t realize the invoices are fraudulent, he/she may simply cut a check. You’re then out hundreds of dollars.

In some cases, when small businesses refused to pay these phony bills, the fraudsters proceeded to send fake collection notices and make threatening calls about late fees and penalties. They may eventually offer to “cancel” the listing—sometimes for a fee—but will then send more bogus invoices from a different company name. They may even sell your company information to other scam artists who will do the same.

Unsolicited Supplies Scams

If you’re running a business, you need office supplies. However, unless you have a formal ordering process in place, your employees may not always be able to confirm what they should be receiving. Some scammers take advantage of this by sending boxes of unordered merchandise to small businesses. They may even send empty boxes and then call to “verify” the delivery. If one of your unsuspecting workers acknowledges the receipt, you’ll then receive invoices and demands for payment.

URL Scams

These days, many consumers make purchases—or at least research their options—online. As such, your website is a vital marketing tool, and you don’t want to lose it. Scammers know this, and some will call your office (or send emails) claiming that your web address registration is set to expire if you don’t make an immediate renewal payment. If the employee who pays your bills doesn’t realize this is a fraud, you could be out hundreds of dollars once again.

Charity Scams

Consumers like businesses that care about their communities. Again, scammers are all too ready to take advantage of this. They make fraudulent calls claiming to be with local fire fighters, veteran’s organizations, police departments or schools and ask whoever answers the phone to make a donation or buy space in a charity publication. They then take the money and disappear.

Fortunately, there are steps you can take to help your business avoid these and other common scams. These include training your staff to verify everything before writing checks or giving out credit card account numbers, implementing a formal purchase ordering system, inspecting all invoices received, and reporting fraud attempts to the FTC. You can do the latter at ftc.gov/complaint.

 

Before You Hire a Temporary Employee

Before You Hire a Temporary Employee

Seasonal and temporary workers have always been common in industries such as manufacturing, construction, landscaping and retail. However, since the recession, more employers—including those who traditionally employed permanent professionals—have turned to temps and contract workers to satisfy their staffing needs. In fact, by 2020, more than 40% of the US workforce will be free-lancing, according to a recent study conducted by software company Intuit. That’s more than 60 million people.

Temporary and seasonal workers are certainly cost effective. Hiring temps is often cheaper than hiring permanent employees with benefits—especially if you expect to use their services for six months or less. If you choose to work with a temp agency, you are relieved of much of the burden associated with maintaining an employee, from recruiting and hiring to payroll expenses and benefit paperwork. However, you must still abide by the laws and regulations that govern the use of seasonal and temporary workers.

Discrimination and Disability – Equal employment opportunity laws, such as Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act, apply to temporary and seasonal employees, whether you’ve hired them yourself or through an agency. These professionals receive the same protection against discrimination, harassment and retaliation as do permanent employees.

Unionization, Wages and Safety – Additionally, the provisions of the National Labor Relations Act, the Fair Labor Standards Act and the Occupational Safety and Health Act also apply to temporary and seasonal employees. You may not prohibit your temps from joining a union. You must pay them at least the minimum wage required by law. And you must provide them with a safe workplace.

Unemployment – Laws vary by state, so consult your state department of labor or your legal advisor to determine your responsibilities. Certain “seasonal employers” may be exempt from unemployment benefit obligations.

Social Security and Medicare – Unless you are using a temporary or seasonal worker acquired through an agency (and they are handling the payroll for that worker), you must withhold Social Security and Medicare taxes from the worker’s wages and pay the required matching amount yourself.

State and Federal Taxes – Again, unless a staffing agency is handling payroll for your seasonal and temporary workers, you must withhold appropriate state and federal income taxes from their pay.

Workers’ Compensation – The law requires all businesses with employees—temporary or otherwise—to carry worker’s compensation insurance. This insurance covers the medical and rehabilitation costs—plus some lost wages—of your workers should they become injured on the job. If you’ve hired your temporary or seasonal workers through a staffing firm, the contract should specify who pays for workers’ compensation insurance. If you are responsible for this and fail to do so, an injured temporary worker could sue your company for negligence.

Whether you regularly rely on temporary and seasonal workers or are thinking about adding to your staff with this type of employee in the future, consult your insurance representative about your state’s workers’ compensation insurance requirements and other legal considerations.