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5 Scams To Watch Out For As An Immigrant Business Owner Thumbnail

5 Scams To Watch Out For As An Immigrant Business Owner


Immigrant business owners founded about 25% of new businesses in the US. There are many successful immigrants who operate small businesses all over the country. 

Unfortunately, there are many scams targeting businesses and many of them prey on small business owners. Immigrant small business owners can be especially vulnerable to scams because of language barriers, a lack of familiarity with US customs and laws, and a strong desire to form relationships with new customers and vendors.

There are 5 common scams (but also countless more) that target immigrant small business owners. You should know about these scams and educate your employees so that they don’t negatively impact your business and your finances.

Scam #1: The “Directory” Scam or Vanity Award Recognizes Your Business In A Sham Publication - For A Fee

Directory scams and vanity award scams prey on excited business owners who may become more than happy to pay cash to receive a listing in a seemingly legitimate business directory or “recognition” in a reputable sounding magazine or website.

What it looks like

“Your business has been selected for the 2019 Best of [City Name] Awards for [Industry]. For details please view our website.”

“Your business has been selected to be featured in this exclusive directory.”

How it works

Victims usually receive an email about the award. Some businesses also receive a phone call. 

After hyping you up with an award, you will learn that you have to pay a certain fee to be listed or recognized.

These award-giving bodies even have websites where they explain why they charge a fee. If you do pay them, you may be listed, but it will be worthless to your business. Or you may not even be listed or receive an award at all.

Many business owners have reported a company called Business Recognition for sending out emails advising them of being recipients of the “Best of” award in their city. 

Watch out for:

  • Award-giving bodies that contact you out of the blue and do not or cannot disclose their selection or nomination process

  • Emails asking you to write your own bio for a vanity directory. Legitimate directories do their own write-up and will only ask you for information to include

  • A recognition where you need to pay to get your award or be included in the directory. If the company tries to squeeze cash out of you, it is most likely a scam and will be of little value to your business

  • If ever in doubt, Google the name of the company contacting you with the word “scam” and read what others have written about the company online

Reputable ways to get recognition for your business include:

  • Claim your business' page on Google or Yelp or TripAdvisor. Doing this is also good for managing your brand and responding to customer compliments and complaints. 

  • Research awards and recognition in your field that do not require you to pay. Your local city paper, chamber of commerce, or trade magazine may recognize new businesses.

Related Article | What Is The Financial Impact of Dual Citizenship? 

Scam #2: Fake Invoice or Vendor Bill Scams Charge You For Products You Didn’t Request And Never Receive

The fake invoice or vendor bill scam takes advantage of companies without a thorough invoice review process. From October 2013 to May 2018, businesses and individuals worldwide lost $12B losses from business email compromise scams where perpetrators pretend to be legitimate vendors. IT businesses, law offices, and HR companies are particularly susceptible to this type of fraud because of the high volume of financial transactions in these industries.

What it looks like

 An invoice will arrive at your business demanding payment for a product or service that you did not request or receive. The product may be similar to a product that you do regularly purchase like new ink toner or web hosting.

How it works

You will receive an invoice for a particular product or service that you did not receive. 

In some cases, someone will call first to ask about the products you are using. Sometime later, you may receive an invoice addressed to the person responsible for purchasing.

Fraudulent invoices may start out small and the same scammer may target you later with a larger invoice. Scammers do this to check if you have a good invoice review process in place. If you pay the first invoice, you may receive a bigger invoice.  

Watch out for:

  • Invoices that are coming in more frequently than usual

  • Billing notices with no purchase order reference or attachment

  • Companies threatening to sue you for non-payment for services or goods you did not order or receive

Tips to protect your business from a fake invoice scam:

  • Pay with a credit card. Your credit card may offer you protection against fraud

  • Thorough invoice review processes

  • Train employees to not give out information over the phone and to communicate with their manager if they receive a suspicious or unusual request

  • Centralize your procurement to as few vendors as possible 

  • Don’t pay invoices without checking the account numbers you are sending payment to and noting differences based on your company records

Related Article | Do I Qualify For the 199A QBI Deduction? 

Scam #3: Tech Support Impostor Scams gain Access To Your Computer Systems By Posing As A Computer Technician

Tech support impostor scams make you or your employees believe there is something wrong with your computer system and that they need to gain access to your computer to fix the issue. Once you have given them access to your system, these impostors will steal your company’s information - usually, financial information - or may plant malware within your company’s computer system.

What it looks like

A pop-up message warning you about a computer issue or virus. Sometimes, you may even receive a call from someone pretending to be an Apple or Microsoft technician. They may seem to know what computer you have, though they are often just stating a popular model.

How it works

Individuals pretending to be tech support request remote access to your computer to resolve a malware or virus problem. The fake tech will offer to help check your computer remotely to fix it.

They may request payment for the “service” they have provided. They may also install harmful software or ransomware which blocks access to your company’s computer system unless you pay up. 

By allowing someone to access your computer, these scammers may also gain access to sensitive information such as your customer records, passwords, and credit card information.

Watch out for

  • Unsolicited and sudden calls or emails from a technician. Legitimate support service providers will only call you if you reported a problem or if there is an issue with your account and they will typically instruct YOU to call THEM

  • Tech support personnel who call out of the blue to request remote access to your computer 

Tips to protect your business from a tech support scam:

  • Train employees to never give access to their computer to anyone who calls 

  • If you are experiencing a tech support issue, YOU should call the company, not the other way around 

  • Remove software authorizing remote access to your computer if you have it installed

  • Don’t click on suspicious and unfamiliar links 

Related Article | Can I Invest In And Start A Company On An H-1B Visa? 

Scam #4: Expensive Office Supply Scams Overcharge You For Products You Didn’t Request Or Want

Non-profit businesses, small business, and consumers lose about $250 million every year because of fraudulent charges from overpriced supplies that they did not order. 

What it looks like

An invoice for expensive supplies that show up at your company that you did not authorize. 

How it works

Scammers call your business to offer specials and free supplies or to verify an order. The vendor will then send some items to your company with an invoice for the products. This invoice often quotes a price which is three times higher than the retail price for the delivered items.

When businesses refuse to pay, the vendor claims they have audio recordings to prove that the transaction is valid. Most business owners will pay the invoice to resolve the issue, but it only leads to another unauthorized delivery and the cycle goes on. 

Some companies that have been caught peddling these scams include Lightning X-Change and American Industrial Enterprises. 

Watch out for

  • Unordered merchandise arriving at your business office 

  • Unusual invoices with no purchase orders from vendors whom you have never done business with 

If unordered merchandise arrives on your doorstep, you can use it without paying the invoice. The law is clear that unordered items may be treated as a gift by the recipient. That probably won’t stop the scammer from trying to get you to pay, but you can inform them that the law is on your side and they may stop bothering you.

Tips to protect your business from an expensive office supply scam:

  • Designate a trained employee to answer all inquiries related to office supplies. All inquiries related to purchasing should be directed to this person

  • Do not pay any invoices unless you have matched it to something you actually ordered

Scam #5: Business Loan Scams Extend Fake or Predatory Loans With Up Front Fees To Unsuspecting Borrowers

Immigrant business owners have limited options in financing and scammers take advantage of this vulnerability by offering business loans with no credit score requirement. 

This scam includes finding an eager small business owner who wants a loan and asking for an advance fee before the funds will be sent. 

In the US, it is illegal to promise a loan through a phone call and ask an advance fee to access the funds. Thus, these schemes are illegal from the start. 

What it looks like

A phone call or email offering “No credit, bad credit, no problem! Low processing fee to get started.”  

How it works

Victims receive an email or a phone offering a loan. If you say yes, the lender approves your loan and calls you back or sends an email to demand a fee before you receive your loan proceeds. 

The lender will inform you that the fee is for processing, taxes, or for insurance. 

Watch out for: 

  • Lenders and loan brokers who do not have a verifiable address or license in your state

  • Lenders who guarantee loan approval before they review your application

  • Loan offers where the supposed lender has no loan agreement in writing or in electronic form

  • Lenders who request a fee before processing a loan

Tips to protect your business from a business loan scam:

  • Research the company offering a loan to make sure it is legitimate. Ask for their state registration, phone number, and complete company name and use this information to learn more about the business. 

  • Do not negotiate loan offers over the phone. Request for the contact details of the caller and the company name instead. You can use this information to research the company. 

  • If you are struggling to pay off your debt, negotiate the terms with your lender or a reputable financing company not with an unknown caller. 

  • Do not make an advance payment to get a business loan and do not disclose sensitive information. 

Related Article | An Immigrant’s Guide To Building US Credit

What can you do to prevent being the victim of a scam?

With so many possible scams, here are some things you can do to avoid becoming a victim. 

  1. Verify the business name, address, and license of any company offering any product or service. Legitimate businesses should be registered in your state. You can also check the Better Business Bureau. 

  2. Don’t pay advance fees or money. Scammers want your money, so most of Scams will ask you to pay money in advance for a loan or award. Sometimes, scammers are also after your personal information since they can use it to steal your identity. 

  3. Be wary of unsolicited contact. Some businesses network through cold calling but not all of these calls are legitimate and some are from scammers. If you have never initiated contact with the person on the phone, be extra diligent. Do not share personal information and do not commit to anything verbally. Ask for all offers to be in writing. 

  4. Check the Federal Trade Commission website for scam alerts. Scams don’t just involve one person or two. Scammers send mass emails to bait people which means that someone may have encountered a similar scam before.  

  5. Be careful of wire transfers. Credit cards have a built-in mechanism to avoid fraud. If you did not authorize the purchase, you can report the transaction. If you wire the money, you have no other way to recover it.

Maintain a Healthy Skepticism at All Times

Immigrant business owners are the favorite target of several financial schemes. You need to be diligent when it comes to checking invoices to see if it is for an authorized and legitimate purchase. 

If you have employees, train them on how to guard against fraud. Doubting the legitimacy of any unusual transaction may help you avoid becoming a victim. But if you do become a victim, you should take action right away. Here are some things you should do if you are the victim of a scam:

  • Report fraudulent transactions to your bank or credit card right away. They may be able to stop the payment or reverse the charge

  • Change your passwords if someone has hacked any of your accounts

  • Contact the credit bureaus, freeze your credit, and place a fraud alert on your accounts if someone is using you or your business’s identity to open accounts; you can proactively freeze your credit at any time

  • Determine whether any of your credit cards or employee benefits offers identity theft counseling or insurance

In addition, you should also report the scam to the Consumer Financial Protection Bureau and to the local police. Even if the police can’t trace the scammer, the report may be helpful if you need it dispute charges later.

Related Article | EB5 Visa Applicants Need To Plan Taxes Carefully

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