An increasing number of Better Business Bureau (BBB) claims have forced the consumer-protection company to issue a warning regarding credit card processing scams. Some cons have caused countless small business owners to lose money in excess of hundreds of dollars throughout high-population regions. Here is a common scam that small business owners should all keep an eye out for in their daily dealings with other companies.
Mass Marketing Fraud
This generally involves a so-called sales representative calling up the company with the offer of saving them money on mobile credit card processing fees if they agreed to sign a long-term contract. The salesperson then closes the deal with a no-cancel contract, which forces small businesses to pay for the duration of this contract without any option to end it.
Business owners are enticed with lower merchant charges in exchange for the purchase of a service or product. Some small business owners are either too distracted to ask questions or too new to mobile credit card processing to know what is and isn't a legitimate deal. The result is a signed contract that ends up costing the business owner countless hundreds.
As unfortunate as this type of event is, there are countless risks business owners face on a daily basis when dealing with outside companies. Small businesses are more vulnerable to scams than larger businesses simply because they lack the funds and resources to adequately perform due diligence on companies with which they do business. Small business owners have more direct access to funds, which makes it easy for scammers to quickly and cleverly obtain money with minimal effort.
What to Look For
Advance-fee schemes are the most common form of scams, occurring when a business owner pays money and expects to receive something of value shortly thereafter. Rather than making this type of decision in a hurry, you should set up an appointment where you can be prepared with questions and focused during the conversation.
Businesses should always be suspicious of excessive sales pressure where signing a contract is concerned. Never take the word of a salesperson regarding the language of a contract, and always read the fine print before you sign any legal document. If the contract contains a no-cancel clause, do not sign it until you have adequately researched the company and its references. To be even safer, consider having a lawyer review the contract.
Signing a nondisclosure agreement during the sales process is another red flag. This is designed to protect the salesperson, and it prevents businesses from independently investigating a fraudulent business. These scammers oftentimes threaten new businesses with civil suits if any reports are filed with law enforcement or the BBB regarding monetary losses.
The best way to figure out whether a company is reputable is to check its reliability report through the BBB. This report provides information about the company and scores it based on the claims about it filed by consumers. In addition, the BBB suggests that you get in writing a declaration that any deposits will be returned if the sale is not finalized, because a verbal agreement will not hold up in a court of law.
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