The phony invoice business scam has been around a long time, presumably because even after all this time the perpetrators find it profitable.
The business scam is simple. A business receives an invoice. The catch is that the invoice is for services or products that have never (and will never) be received. The perpetrator's hope is that the business will pay the invoice automatically, never even noticing that it's a phony.
How This Business Scam Works
Bogus directory listings, ISP services, and hosting services are all common subjects for the phony invoice business scam, but any service or product is fair game.
Your business might receive a phony invoice demanding payment for membership in a non-existent organization, for instance – an organization with a name very similar to those of legitimate professional and business organizations.
Sometimes the phony invoice is a disguised solicitation. If you look closely at such an invoice, you may see some very fine print that identifies the document as a solicitation. Often there's nothing to distinguish the phony invoice from a real one, except the fact that your business did not contract for the services or products listed on the bill.
How to Protect Your Business
Your best protection against the phony invoice business scam is to always carefully read the invoices your business receives before you pay them. If you don't handle payment of your invoices yourself, be sure that whoever does handle invoice payments is aware of the phony invoice scam and has been told to check all invoices against purchase orders and against goods and services received.
If you are unsure whether or not your business owes payment for particular services or products, call the phone number on the invoice to enquire. Legitimate businesses have genuine contact information on their invoices and welcome questions.
In Canada, "(I)t is an offence under section 52 of the Competition Act for anyone, for the purpose of promoting a business interest or product, to knowingly or recklessly make a representation to the public that is false or misleading in a material respect" (Competition Bureau).
The Competition Bureau oversees the application of the Competition Act, The Consumer Packaging and Labelling Act, the Textile Labelling Act, and the Precious Metals Marking Act. If you believe you have been misled and would like to file a complaint, contact the Bureau toll free at 1-800-348-5358 or visit the Competition Bureau's website.
If you receive a phony invoice, you should also send a copy to your local Better Business Bureau. The BBB investigates and publicizes scams in its ongoing efforts to protect businesses and consumers.
For more information on how to avoid becoming a victim of any business scam, see: