Business directory scams preying on small business owners – National Consumers League

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The National Consumers League’s Fraud Center is warning businesses and non-profit organizations to be on the guard for con artists armed with bogus “invoices” for business directory listings. We regularly receive complaints about this scam, but so far in 2012, we have received more than 100 complaints, a 500 percent increase (no, that’s not a typo) versus the first nine months of 2011.“Scams tend to come in and out of fashion,” said John Breyault, Director of NCL’s Fraud Center. “It certainly appears that the business directory scam is once again the ‘con du jour’ for fraudsters.”

In a typical business directory scam, the victim (often a small business or non-profit organization) will receive a call asking the recipient to “verify” or “confirm” information such as business address, business name, or fax number for a business directory listing. If the recipient of the call provides this information, the organization shortly receives an urgent “invoice” for the cost of the alleged directory listing. In some cases, a copy of the listing accompanies the invoice, which is often just a printout of an existing online business directory listing.

In many cases, the business receiving the invoice will simply pay the bill without questioning the charge. If the charge is questioned, scammer may threaten legal action or offer a “discount” to get the organization to pay up. In some cases, the scammer may even produce a recording of the original verification phone call as “proof” that the charge was authorized.

Examples of recent scams reported to our Fraud Center:

  • A consumer from Northern California recently contacted us about a directory ad scam she was caught up in. She received a $599.99 bill for an online directory listing for a defunct company she had owned. She was told that they would close the account and zero out the bill. However, she later started receiving collections despite her clear indication that her company that was out of business could not have placed online directory listing ads. Her alleged “bill” is now up above $750 and the harassing faxes have kept coming.
  • Another consumer from Santa Barbara, California described to us a similar online directory scam. After taping an assistant manager’s alleged “authorization,” the consumer’s business received a $599 bill for online directory listings. The assistant manager had in fact received a call, but the scammer claimed it was simply to authorize the removal of an ad. After refusing to pay, the consumer has continued to receive harassing phone calls and faxes threatening to send the account to collections.

Business and non-profit organizations can take action to spot and avoid this scam:

  1. Train staff to spot this scam especially the “verification” phone calls, in staff meetings, on bulletin boards and email alerts. Special attention should be given to employees who answer phones for the organization or who have authority to write checks on behalf of the organization.
  2. Verify existing arrangements for business directory listings before paying invoices for such services. If you’re not sure you’ve ordered such a service, don’t pay the bill.
  3. Don’t be fooled by the “walking fingers” logo or the name “Yellow Pages,” as neither is trademarked or unique to any particular company.
  4. We wary of any invoice that arrives without a phone number or mailing address for the company allegedly billing for the listing service. Even if such information is on the invoice, check up on the business to ensure that it actually exists.
  5. Check with the local Better Business Bureau for the state where the business address is listed. Legitimate businesses should also be registered with their state, typically with the state’s Department of State or Corporation Commission.

Businesses or non-profit organizations that have been approached by this scam or fallen victim to it should be sure to report it to NCL’s Fraud Center at www.fraud.org. For more information on this scam, check out NCL’s fact sheet on bogus invoice scams.