Billing scams

Small businesses are often victimized by scam artists and may never even know they have been scammed. Here is one common scam and tips on how to protect your business.

Phony Billing Schemes

Kentucky businesses should be on the alert for invoices demanding payment for supplies, goods and services never ordered or never received. Every year, businesses lose substantial amounts of money because they fail to question or even recognize these phony demands for payment.

Yellow Page Advertising

The most common type of phony billing scheme involves solicitations for "yellow page" advertising. Consumer complaints filed with the Attorney General's Office, Consumer Protection Division, indicate that a variety of firms send statements for "yellow page" directory advertisements that look very similar to invoices mailed by better-known directories. The solicitations even include the familiar "let your fingers do the walking" symbol. Sometimes businesses are contacted by telephone asking them to renew ads from last year, leaving the impression that the transaction is routine.

Since the solicitations and invoices appear to be identical to a normal billing, the invoice is often inadvertently paid with other routine bills. These invoices range in price from a few dollars to several hundred dollars. The directory publishers stay within the limitations of law by including a statement that says "this is not a bill and you are under no obligations to pay the amount stated." The directories may be published, but the independent promoters rarely provide details about how many directories are published and where they are distributed.

Office Supplies

Kentucky businesses also receive invoices for office supplies that look quite authentic. They are often personalized to include the name of the business or even the purchasing agent. Sometimes these are advertisements cleverly disguised to look like bills. Follow-up letters and invoices are often sent, to give the impression that you are late in making a payment. Some companies follows their solicitation with a letter threatening credit rating damage if the phony invoice is not paid. Other billers may assert that a tape recording has been made of the agreement to purchase goods or services and that collection procedures will begin in order to get the money.

Protect Your Business

Take the following precautions to protect your business against phony billing schemes:

  • Don't place orders over the telephone unless you are certain it is a reputable firm.
  • Be sure of the organization's name, address and phone number as well as the solicitor's name and his or her position with the company. Check records to confirm any claim of past business.
  • Read your mail carefully. Warn employees to be on the alert for any unusual invoices.
  • Check business records to determine if merchandise or services were authorized, ordered and delivered before paying invoices. It may be helpful to have one employee review and approve all invoices.
  • If the company claims to have a tape recording of the order, insist on hearing it.
  • Before placing any advertisements, verify that the publication exists. Make sure its circulation meets your needs.
  • When in doubt about yellow page directories, contact the directory you want to carry your advertisements to verify that renewal invoices have been mailed and clarify procedures for payment.
  • Report phony billings to postal authorities and alert other businesses in your area.