Protecting Your Online Business from Scams
Since then, Mary, who inherited a lot of money from her late husband, went to live at an undisclosed address, mainly to avoid sharing the wealth with her sisters. For years, neither sister knew where Mary went. Then, one day out of the blue, Ann, the youngest sister, got a call. It was Mary.
Since then, Mary, who inherited a lot of money from her late husband, went to live at an undisclosed address, mainly to avoid sharing the wealth with her sisters. For years, neither sister knew where Mary went. Then, one day out of the blue, Ann, the youngest sister, got a call. It was Mary.
Scammed
After Ann recovered from the initial shock, Mary related to her how she was scammed out of her fortune. How did it happen? In Mary’s words:
“I don’t even know how to explain it. I felt as if something was pulling me; it was as if I just couldn’t stop.”
On several occasions, Mary was called or directly approached by a much younger man who convinced her about the millions she could earn by investing in Bitcoin. Mary, who had no knowledge about Bitcoins, trusted the slick, well-dressed man who became like a trusted friend, even visiting her at home.
Mary made multiple withdrawals of large sums of cash from her bank accounts and willingly gave the man to “invest”. Then, once the scammer got all of Mary’s life savings, he vanished like a ghost, leaving her broke, and desperate enough to call her youngest sister.
Targets
Why was Mary targeted? Scammers study very well their potential victims and once they get access to a name, other personal information or a phone number, they then try to build a relationship. Experienced scammers know how to manipulate people’s emotions in order to take advantage of them. They know how to build trust, create a sense of urgency, and of course, how to prey on one’s greed.
Digital Entrepreneurs and Scams
Digital entrepreneurs need to be vigilant to avoid becoming victims of scams. For example:
• In the desperation to succeed, a digital entrepreneur may fall prey to a scammer’s promises of instant wealth.
• Digital entrepreneurs may become victims of scams if they fail to conduct proper research and due diligence before taking on what appears to be legitimate business opportunities.
• Scammers recognize that starting an online business can be overwhelming for new entrepreneurs, given the many different things they may have to deal with. As such, a scammer may suggest solutions to make things easier, simpler, and more convenient. Being overwhelmed, a new entrepreneur could become susceptible to these scams.
• Finally, like Mary, new entrepreneurs may become vulnerable to scams if they remain virtually isolated and fail to involve the support of family or a supportive network of experienced individuals who can provide guidance and advice.
Mary’s greed, selfishness, virtual isolation, and tendency to make decisions without consulting anyone close to her, made her a perfect target for getting scammed.
Common Types of Scams Targeted at Digital Entrepreneurs
- Fake Investment Opportunities
• Scammers may approach you promising high returns on investments in a relatively short period of time. Using persuasive tactics, they may try to convince you to invest your money with them. If successful, they will quickly disappear with your money.
2. Drop Shipping Scams
• Today, there are many people legitimately earning money online through drop shipping. Unfortunately, there are those who try to exploit this popular business model; in some cases offering counterfeit products, and then disappearing once a payment has been made.
3. Phishing Scams
• Phishing involves the use of fraudulent email messages, or websites that mimic legitimate companies or platforms. This technique is used by scammers to trick you into revealing sensitive information, such as your login or financial details.
4. Pyramid Schemes
• Pyramid schemes are illegal, unsustainable, investment schemes, disguised as legitimate multi-level marketing (MLM) programs. Under these schemes, rather than actual product sales, the fees of new participants are used to pay existing participants for recruiting new members, until it can no longer be sustained.
Recognizing Scams
Today, scammers are getting smarter and more elusive, but that doesn’t mean they cannot get caught or that they are undetectable. Your online business will be at less risk when you are able to quickly recognize scams, as summarized below:
Unrealistic Promises
• Don’t get caught by extravagant claims about huge profits, guaranteed outcomes, and instant success. On the contrary, genuine businesses thrive on hard work and require reasonable time before sustainable results can be achieved.
Pressure Tactics
• Scammers don’t give up easily. Once they see the possibility of succeeding they will use high-pressure techniques to force you into making hasty decisions. Look out for the exclusive deals, the so-called limited-time offers, etc.
Lack of Verifiable Information
• Be cautious when approached by businesses that offer only vague details and make it difficult or impossible for you to find clear and transparent information about the owners, physical address, contact details, and so on.
Impact of Scams
Scams can affect you and your business in a number of ways, and these include:
Financial Loss
• Mary is a perfect example of the fact that scammers can drain your financial resources, leading to significant monetary losses, impeded business growth, bankruptcy, and even drive you out of business.
Damaged Reputation
• An entrepreneur’s reputation can be seriously tarnished by a scam, leading to loss of existing customers, difficulty in attracting new ones, decreased sales, and consumers’ lack of confidence in your business.
Diversion
• Dealing with scams wastes valuable time and can divert one’s efforts from building and concentrating on the growth and development of the business.
Avoiding Scams
The more aware we are about scams, the more we will be able to avoid them. By implementing certain practices we can reduce significantly the risks that a scam can pose to an online business.
Safe Online Practices
• You can minimize risks to the business by investing in good anti-virus software. Update your software and plug-ins, and enable different levels of protection by using strong, unique passwords, as well as by enabling two-factor authentication, which adds another step to the traditional username and password login process.
Secure Payments
• When sharing financial information or making payments online, always use secure payment gateways. Do not share your credit card details or bank account information through unsecured channels.
Verify Credentials
• Make sure you verify the credentials of the individual or company involved before investing money or sharing sensitive information.
Research Opportunities
• Scammers are more successful when you fail to properly investigate a proposed online business opportunity before making commitments. Thoroughly research the company, its principals, and its reputation by consulting experienced entrepreneurs, checking independent reviews, and using online forums, etc.
Educate Yourself
• Keep up-to-date on the latest techniques and strategies being used by scammers to target digital entrepreneurs and others.
Protect your Business
Mary was not exactly a new digital entrepreneur, but we can certainly learn from her experience. Whenever you are making investments, do so through a reputable company, with clearly identified professionals, and a well-established address.
Finally, don’t underestimate the power of your instincts. In certain circumstances this may be your best weapon, especially when something seems too good to be true.
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