The FTC recently shut down a sophisticated directory scam operation. The fake premise was to update a directory listing. In reality, it was a Solicitation-Disguised-as-an-Invoice scam as we.
A company called Fair Guide sent letters to businesses across the country asking the business to update their contact information in this directory of Trade Show participants. However, the fine print in the letter stated that by providing contact information and signing the form, the business agreed to pay for a very expensive directory listing. The annual price averaged more than $1,700.
To help protect your company against this type of scam, consider the following steps:
- Research the company: Visit BBB.org to obtain information regarding the company’s BBB rating and marketplace performance.
- Check your records to confirm claims of previous business dealings with a company or seller.
- Establish effective internal controls for the payment of invoices.
- Channel all bills through one department.
- Have employees fill out pre-numbered purchase orders for every order placed.
- Check all invoices against purchase orders and against goods or services received.
- Verify all invoices with the person who gave written or verbal authorization.
- Clear all invoices with the appropriate financial staff.
- In a dispute, if the invoicing company says it has a tape recording of an order, insist on hearing it.
For more information on this scam, go to Protect Your Organization from Directory Scams.