The phony invoice business scam has been around a long time, presumably because even after all this time the perpetrators find it profitable.
Unlike many business scams that prey upon people's dreams or hopes, this business scam preys upon people's inattentiveness.
The 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.
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. The latest twist in this business scam is invoices for membership fees. The Competition Bureau issued a warning in late February 2003 to business people and professionals against phony invoices requesting payment for membership in various non-existent organizations. These phony invoices often use names that are similar to those of legitimate professional and business organizations that you may already be a member of.
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.
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 Web site.
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.
