Are you a business owner? Beware of credit scams!

Are you a business owner who has been scammed? If so, you’re not alone. Credit scams are all too common, and it can be devastating to have your hard-earned money or resources taken away from you. Check out how they work.

Buying on credit

One technique that has become a scourge among customers is buying on credit, i.e. with deferred payment. This is quite a popular way of doing business and in most cases there are no problems with it. In the event of problems, such money can always be enforced, e.g. by taking the matter to court. Provided that the company exists and operates legally.

Recently, there has been a case in the news about a company which, although theoretically legally established and listed in the register of companies, was operating as a fraudster.

The scammer, operating under two names, NB Construction and NB Wholesale, took goods from a number of suppliers on deferred payment, then asked for deliveries to various locations. He used made-up details. They managed to obtain £60,000 worth of goods in this way.

Then, pretending to be tradesmen or owners, they offered renovation or construction companies the opportunity to buy these items at a much lower price than the shop price, but for cash.

As a victim of such a scam, you may end up having to pay for these items yourself, even though it was not your fault that the payment did not go through. This can be a difficult financial burden to bear, and it can have serious repercussions for your business.

The key to avoiding becoming a victim of a credit scam is to do your due diligence when dealing with any suppliers or contractors. Make sure you thoroughly research their background, check their references, and ask customers who have dealt with them in the past about their experience. It’s also important to get all agreements in writing and keep detailed records of all transactions.

If you have already been scammed, there are steps that you can take to try and recoup some of your losses. You may be able to get back some or all of the money through legal action or by filing a dispute with the relevant agencies.

Other popular credit scams

Identity theft

Credit scams can take many forms and techniques, but the most common ones typically involve identity theft. Identity thieves often use stolen information to open new credit accounts in another person’s name. They then use the new accounts to purchase goods or services that they have no intention of ever paying off, leaving the victim with a mountain of debt and bad credit.

Credit repair scams

Beware also of companies that offer to clean or upgrade your credit history in the system for a fee, of course. Remember that there is no miracle method. You work for years on your credit history and it is even less possible to change anything if you are in arrears with your loan payments. Don't be tricked by scammers as you could lose even more.

Unauthorised charges

Other common tactics used by scammers include making unauthorised charges on existing credit cards, creating fake charities and requesting donations, applying for a loan in someone else’s name without their permission, using fake websites to steal personal data such as usernames and passwords, and stealing mail from people’s homes or offices in order to gain access to account numbers.

Goods on credit

Credit scams involve someone pretending to be a legitimate company or individual who offers customers goods on credit terms. The “credit provider” will then request payment upfront in return for the goods that were never delivered. This is known as advance fee fraud and it often targets vulnerable people such as seniors or those with poor credit histories.

Typically, the scammer will start by offering a loan or credit card with low interest rates and no fees. However, the customer must make an upfront payment in order to qualify for this offer. The scammers will usually ask for payments via wire transfers, prepaid cards or gift cards. Once they have received the money, they disappear and never deliver the goods or services that were promised.

No matter the tactic, credit scams can be extremely damaging to victims’ financial health and well-being. Victims of credit fraud can suffer from serious damage to their credit scores, which may take years to repair. Additionally, they can face significant legal trouble if identity theft is involved, as it is a felony in many states.

Take an action

If you have already been targeted by a credit scam, it's important to take action quickly to limit the damage. Here's what you can do to protect yourself:

1. Before giving a company credit or deferred payment, always check it out first. Find out how to do this here.

2. Contact your credit card company or bank immediately: If you suspect that your credit card or bank account has been compromised, contact them right away to report the fraud. They will be able to freeze your account and prevent further unauthorized transactions.

3. Check your credit report: It's important to check your credit card statement, credit report regularly to look for any unauthorized activity. If you see any suspicious activity, report it to the credit bureau and dispute the information.

4. Change your passwords: If you suspect that your passwords have been compromised, change them immediately. Use strong passwords that are difficult to guess and don't use the same one for multiple accounts.

5. Educate yourself: Learn about the different types of credit scams and how to recognise them. Stay up-to-date on the latest scams and be cautious when giving out your personal information.

6. Be proactive: Take steps to protect your credit and finances, such as monitoring your accounts regularly and setting up alerts for suspicious activity.

7. Beware of phishing scams. Never click on links from unknown sources.

Remember, prevention is the best defence against credit scams. Stay informed, be cautious, and take action quickly if you suspect that you have been targeted by a scam. By staying vigilant, you can protect yourself and your finances from harm.

Where to report credit scam?

If you think you could have been scammed, it is important to report fraud to your local police or Action Fraud by calling them on 0300 123 2040.