If you are considering starting a business, then surely you are aware of the immense number of pitfalls that you have to guard against. You not only have to make sure that your business meets their bottom line, but you also have to make sure the business doesn’t run afoul of the government or become lax in their taxpaying obligations to Uncle Sam. However, there is one area that could also be just as important. Consider this question: how likely is it that the industry you are going into will attract scammers? It’s an important question simply because of the fact that one bad transaction could potentially even drive you out of business. What industries then, are the ones most prone to scams? Here are three of them for you to be aware of.
If you are involved in the e-commerce industry, then you should be aware that there a number of tactics that a con artist will utilize in order to make off with your hard-earned money. Revision Legal cautions that some common scams would include credit card fraud, where a fraudster will purchase something from your online store using a stolen credit card. Refund Fraud, where a fraudster will claim they need a refund because of an overpayment but will ask the store to send it via an alternative means because they will claim their credit card account is closed. Friendly Fraud, where an otherwise legitimate customer will falsely claim that their card has been stolen. Identity Theft, which is where a con artist simply uses an individual’s stolen credit card to make purchases. Phishing, where a con man pretends to be a financial institution and tries to get information from someone to attempt to steal their identity.
Banking and Financial Services
A 2013 study revealed that one of the industry’s most susceptible to fraud would be the banking and financial services industry. Gelman, Rosenberg, & Freedman explain that part of the reason for this would be because the banking industry was privy to about 17% of these fraud cases as well.
Real Estate Elevated warns that as house flipping tv shows increase in popularity, sadly, so do scams. Viewers are excited about the idea of real estate investing. It seems glamorous and like a real, tangible way to make money. Unfortunately, scammers take that naive enthusiasm and twist it to their benefit. Hang around the real estate industry long enough and you will quickly realize that it attracts scams just like a moth to a flame. As just a few examples, there is escrow fraud, loan flipping (where a mortgage broker convinces a homeowner to refinance more and more money repeatedly), fake foreclosure relief, and rental scams. House flipping scams can also occur when someone deliberately lies or withholds information regarding a property for sale.
If you are considering going into one of these industries, probably one of the best things you can do is to fully study every aspect of it so that you are able to safeguard yourself against scams. Make sure to do your research in all of your investing strategies.