Small businesses are being warned to exercise caution when buying goods or services through social media, after overseas students in Australia were allegedly defrauded when buying airline tickets through social media.
More than 200 individuals living in Melbourne and Sydney could be the victims of a fake ticket scam estimated to be in excess of $360,000.
A 24-year-old woman was arrested earlier this month but has since been granted conditional bail, according to NSW Police.
She has been charged with 10 counts of dishonestly obtaining financial advantage by deception and is due to appear in court on February 3.
The woman in question began selling legitimate airfares through Facebook, however, Vietnamese students have recently reported the tickets provided to them were invalid or had been cancelled, according to the ABC.
According to reports, many of the individuals who purchased airline tickets had come across the Facebook group via referrals from people they knew.
Brett Warfield, chief executive of Warfield & Associates, told SmartCompany this morning when someone puts in a good word for a business, it increases the likelihood that someone will follow up on that lead and not necessarily undertake research of their own.
“If you’ve got someone who is recommending them in your community, it increases the chances you will invest based on a lack of other adequate information,” Warfield says.
“In this situation and some cases that have gone through the courts, it’s a more of a community-based fraud rather than cold calling on the telephone.”
However, Warfield says both consumers and small business owners should still apply the usual checks and balances even when a friend or colleague recommends a business.
This is particularly the case if they are a potential supplier or are selling big-ticket items such as airfares.
“I know a lot of small businesses just have a Facebook page, but you’ve got to look for some sort of footprint to see that they really exist,” Warfield says.
“In this case you would check if they have a travel agent’s licence. There should have been something on their Facebook page to indicate they were a licensed travel agent.”
Warfield also says a reputable organisation will usually also have a stand-alone website.
“Another [tip] would be to check on ASIC to see if their business name is registered,” he says.
“That doesn’t cost you anything – and you can search either a company name or a business name.
“If those things aren’t there, that should start a few alarm bells ringing.”
Broede Carmody is a former senior SmartCompany reporter. Before this, he was a co-editor of RMIT University’s student magazine Catalyst.
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