Running a small business is great, but it comes with challenges. Unfortunately, scams are among them. From fake inquiries to payment fraud, service-based businesses are vulnerable to an array of fraudulent schemes.
We put together a list of scams targeting service-based businesses and how to avoid them.
Common Small Business Scams
#1 False Check Payments
Be wary of clients who pay with checks, especially if the amount exceeds the agreed-upon fee. Some scammers send fake checks to receive services or refunds before the check bounces. There are ways to verify the authenticity of checks, but it may be best to avoid checks altogether.
Consider using secure payment methods from online platforms like PocketSuite. We offer multiple payment methods, like card readers, tap-to-pay on a mobile phone, and Buy Now Pay Later. With multiple secure payment options, you can get paid faster while creating a safer experience for you and your clients.
#2 Phishing Emails
This is one of the most common types of fraud, and we all get them: scam emails! Phishing emails try to steal sensitive information about your business or clients. They may pose as your boss, employees, or other businesses you work with. It’s important to verify the legitimacy of email senders and avoid clicking on suspicious links or downloading attachments from unknown sources.
#3 Chargeback Fraud
As a service-based business, chances are you accept credit card payments all the time. That’s why you should be aware of chargeback fraud. With this kind of scam, “clients” will dispute legitimate transactions to receive refunds while keeping the services rendered. You may lose the money entirely or have to spend hours sorting out the issue with your bank or booking platform. To avoid this, keep detailed records of transactions and communication to dispute fraudulent chargebacks effectively.
#4 Identity Theft
You should also be wary of identity theft. Identity theft is very common and can have long-lasting effects on your business and personal life. Be sure to safeguard sensitive information such as social security numbers, tax IDs, and financial records. Be wary of clients requesting unnecessary personal information and verify their legitimacy before sharing confidential data.
#5 Fake Reviews and Ratings:
As a business owner, your online reputation is everything. Unfortunately, there are people ready to tarnish it. Beware of fake reviews and ratings orchestrated by competitors or individuals seeking to manipulate your business’s reputation. Monitor online platforms and report any suspicious activity to maintain the integrity of your business’s reviews.
PocketSuite makes it easy to manage your online reviews. You can respond to reviews directly in the PocketSuite app to call out any fakes and protect your reputation.
#6 Bait-and-Switch Tactics
Some scammers may employ bait-and-switch tactics. They initially agree to the terms and pricing of your services but later demand additional services and threaten negative reviews unless you comply. Clearly outline the scope and terms of service in your contracts to protect against such manipulative tactics.
PocketSuite makes it easy to manage all your service contracts in the app. You can attach contracts to services in the app and require clients to fill them out when they book you online.
#7 Urgent Service Requests
Use caution when you receive requests that promise high pay for urgent services. Research the legitimacy of the client before committing to any agreements, as some offers may turn out to be fraudulent or exploitative. To be safe, accept service requests through a scheduling platform and only after a contract has been signed. Also, be sure to have their credit card information on file before carrying out a service.
#8 Data Breaches and Cyber Attacks
If you manage your business online, through a website or social media platform, then you’re at risk of cyber attacks. You can protect your business against data breaches and cyber attacks by implementing robust cybersecurity measures, such as firewalls, encryption, and regular software updates. You should also train employees on cybersecurity best practices and regularly back up essential data to mitigate the impact of potential breaches.
Are you at risk?
Fraud and scams are an unfortunate part of running a business. But there are ways to protect yourself, your team, and your clients. Take steps to protect your personal information, and always use a secure platform to accept payments and sign contracts. PocketSuite is an all-in-one platform to manage a service-based business.
