Scam complaints double as shonks target domain names, directories and franchising

The Australian Competition and Consumer Commission says it received 22,000 more complaints about scams in 2010 than it did in 2009, and has warned businesses they need to remain vigilant as fraudsters target more SMEs over the internet.

The warning comes as the ACCC launches its annual consumer fraud week, revealing in its accompanying report that the regulator received about 42,000 scam-related reports in 2010 compared to 20,000 in 2009.

ACCC business commissioner Michael Shaper says while the traditional business scams – mail and advertising fraud – are still popular, more criminals are relying on a business’s use of technology in order to steal money.

“The difficulty about the modern internet age is that it’s so much easier to scam people,” he warns.

“One of the more interesting ones we’re seeing is domain name registration fraud. So people will receive a statement for hosting a domain name, and the domain will actually appear to be quite similar to their own.”

“So if you had a domain that says .com.au, the invoice might only say .com, and you may not notice it because it appears to be so similar.”

The latest ACCC Report shows that online scams remained the largest method of delivery, with digital frauds rising from 14,000 to 19,000 in 2010.

“These are very difficult,” Schaper says. “Many of the operators aren’t even in Australia, so they’re difficult to fund and difficult to prosecute.”

The number of telephone frauds has also grown, with reports rising from 2,000 in 2009 to 14,000 in 2010. The ACCC says the low price of international voice calls allows many scammers to work offshore, providing them with a relatively safe haven to work from.

Other popular forms of fraud included directory listing fraud and non-existent advertising.

Directory listing fraud involves a scammer contacting a business about making a payment to appear in a business directory that doesn’t actually exist.

While Schaper says this particular form of fraud is quite old, he says more businesses are falling for it and they need to remain on alert. “If it sounds too good to be true, then it probably is,” he warns.

The other popular form of fraud sees businesses scammed into paying for advertising in publications that don’t actually exist.

But Schaper says one of the most prominent frauds sees people sucked into offers that promise them thousands of dollars for “buy yourself a job” schemes.

“You see these ads in newspapers and directories, promising people thousands if they sign up. It’s essentially a promise of buying yourself a job, and it’s closely aligned with franchising.”

“But while many people would know most franchise systems are fine, others don’t know about these particular scams. Because, surprise, surprise, people find out they don’t earn income and they don’t get anything else from these things.”

Schaper says the new ACCC Report highlights the importance of protecting businesses from fraud – around 16% who reported scams said they suffered a monetary loss. While the total amount lost dropped slightly to $63 million in 2010, Schaper says it’s still too high.

“There are a number of ways a business can protect itself, because asking yourself “is it too good to be true” might not work sometimes.”

“If there’s more than one of you operating the business, then you need other people checking the books and signing off on things before it goes ahead. Of course, that’s hard when you’re a small business and you’re very busy, but it really is necessary.”

Schaper also recommends that businesses contact their industry groups if they identify scams, as they will be able to identify other businesses and stop the scam from spreading.

“Scammers sometimes prey on particular regions or industries. If you’re a member of the industry association, let the members know about these things – it doesn’t take all that much effort to tell them as well.”

The ACCC report also says more scams are being targeted at larger businesses, and are becoming more sophisticated with the use of logos and paper that looks genuine.”

Schaper says businesses wanting to report a fraud should contacted the ACCC’s ScamWatch program, either through the ACCC website or the new ScamWatch Twitter account.