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Scam Correspondence- How to Avoid Becoming a Victim

5 minute read
Scam Correspondence- How to Avoid Becoming a Victim
“Hi there. If you do not submit the form and payment of $200 to this address, then you will be in trouble with the local police.”

Naturally, this type of message is quite alarming, and the perceived immediacy of the time constraints may not afford recipients the time to thoroughly review the details. Some business owners, seeing this message and wanting to make sure that they are not in any legal trouble, would complete the form and make the payment to the “State of Texas.” What’s wrong with this picture? Well, for one, this is not from the Texas Secretary of State, or any governmental office. So then, where is it from, and why is it so immediate? Frankly, it isn’t and is merely a fraud attempting to solicit money from unsuspecting new business owners.

When starting a business, a founder’s time is pulled in what feels like 1000 directions at once. Being the CEO, head of product, head of marketing, and whichever hat needs to be worn at a given time can leave very little room for anything that doesn’t feel mission critical. However, there is an often overlooked aspect to building a new company that is crucial to developing a secure business. Developing a protocol on how to successfully evade scams and training the entire team on how to execute it is a relatively simple, proactive step founders can take to save headaches later on. Unfortunately, bad actors are everywhere and if you are not careful, your business will be significantly at risk.

Common Tactics

It is important to first consider the different types of tactics that scammers may use to disrupt your business.

  1. Scammers try to appear trustworthy. They might guise under the pretense of being affiliated with a potential partner, or a governmental agency
  2. They also try to insist a sense of urgency that creates room for mistake which is exactly what the scammers want. Because they push you into the sense of urgency, you will not have enough time to properly identify the scam which will lead to making a quick decision, potentially putting the business at risk.
  3. They also use intimidation and fear to impose the sense of urgency so that you might send a payment before being able to assess the situation.
  4. In order to tie up any loose ends, scammers use untraceable payment methods. This can include but not be limited to wire transfers, reloadable cards, or gift cards that are impossible to trace or refund.

Here is a recent example of the first type of scam that had been in the circuit among new businesses this year.

A "2020 Certificate of Fact Request Form" from the "Texas Certificate Service", with a "key code" of TX-905543-8 and a "PLEASE RESPOND BY" date of August 6, 2020. The "certificate service" charges a $77.50 fee for a Certificate of Fact. The letter looks like an invoice and is an example of scam correspondence. The "service" has an address of 13359 N Hwy 183 #406-316, Austin, TX 78750, an email of records@certificatefilingservice.com and a toll-free number 1-866-301-2738.

While a “Certificate of Fact Request Form” may look at first glance like a legitimate document, appearances can be deceiving. For starters, the form clearly states “Texas Certificate Service is not affiliated with any government or state agency…” which indicates it is not affiliated with the government or the Texas Secretary of State, despite trying to persuade you otherwise. That is not the only alarming part of the form. The fee of $77.50 is also suspicious seeing as though on the Secretary of State’s website, no similar fee can be found. It is business scams like this one that seem like they could be real that most end up falling prey to.

Defending your business against such scams

In order to keep your business safe from such scams, it is important to take a few actions to ensure that your business steers clear of such scams and more. The first step is to create a protocol that deals with various scams and more. While the list above provides the most common methods scammers use, they are notoriously creative in their means. Each year, they try to come up with more innovative schemes that you will need to be prepared for. Implementing an overall protocol to compensate for any of their tricks will benefit the business immensely. The protocol can include different types of common scams  (which can be found on the Federal Trade Commission’s website) as well as the various ways of handling such scams. This protocol can also detail the actions steps that need to be taken in the unfortunate event that your business has been misguided by such scam. Additionally, there can be information on the proper methods of storing passwords, and even the process of reviewing all transactions that occur within the business. All of these suggestions are great starting off points for the protocol, but the protocol that you create for your company should be tailored more to your businesses’ unique needs.

Proper Training

The next step is to make sure that your employees are well aware of business scammers and how to both identify and properly handle them. To accomplish this, the previously mentioned protocol must be fully incorporated into all employee manuals. All new employees must be properly trained in accordance with company protocols and policies. Also, all employees regardless of seniority should go through a continuing education process at least once a year, teaching them the newest scams that have surfaced throughout the year.

Payment Validation

Another action step that your business should take is to validate all payments. In other words, make sure that you are aware of what each payment is for, where it is going to, and how it is going there. Scammers give an immediate deadline to create a false sense of urgency which makes it tempting to put less focus and prioritization of the what, the where, and the how. However, abandoning established protocols are exactly what they are hoping their victims will do. Therefore, it is important whenever dealing with any kind of outgoing payments, to keep these three points of identification as priorities and make sure all parties involved are aware of each of these points of the financial transaction. Additionally, ensure that there is a set system in place detailing how each payment is approved within the business and make sure that the employees are trained in using this system. Each payment should have an established approval process to ensure the validity.

Adapting Technologies

It is critical to stay up to date with the latest technology. For example, as more scams have been taking place over the phone, do not take caller ID at face value. In other words, do not trust caller ID as more bad actors have been manipulating caller ID systems. Email addresses are also something that can easily be faked. Do not click on any links before you verify them! Additionally, make sure to secure all passwords and important business files. Never leave documentation of passwords anywhere on the business’ computers’ in the event that a scam does come to fruition.

Transparency of Parties

Lastly, make sure you know who is on the other side of the transactions. For example, before signing on with new business partners, make sure proper due diligence is done with regards to researching those involved. Inquire what the terms are and make sure to be aware of everything that the potential partners are asking for. See if you can find out more information about their business from other business insiders and other professionals. Do not rely on colleagues for accurate information and make sure to receive a professional opinion.

Next Steps

While all of these are strong initial suggestions to consider taking when starting up your new business, consulting directly with experienced startup attorneys will be even more beneficial as to make sure all the bases have been covered to assist in safeguarding your company against scams such as these. Having experienced startup counsel allows founders to focus on work only they can do and have more peace of mind amidst the journey of business building.

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Reviewed By

Feras Mousilli

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