Scam Alert!!
DO YOU USE QUICKBOOKS INVOICES IN YOUR BUSINESS?
Here is the scam:
You talk to a client, gather information about their business, send a proposal/engagement letter, and they sign it. You then send them an invoice for the agreed-upon amount to initiate the work. Let’s say the invoice was for $1,000. However, instead of paying the invoice amount, they mistakenly pay a higher amount, such as $10,000. QuickBooks processes the payment and deposits the money into your account the next day. After the money appears in your account, the client contacts you (or vice versa) and claims they made an error. They will provide a sob story about being unable to meet payroll and urgently request a refund. Since you see the money in your account, you proceed to refund them. Two days later, QuickBooks realizes that there were insufficient funds in the client’s account for the transaction and withdraws the $10,000 they initially deposited into your account. Consequently, you end up losing the $10,000 you refunded to the client.
What to do if this happens to you:
DO NOT refund them anything. Ignore their requests or inform them that you cannot issue a refund until after a two-week waiting period, allowing the payment to clear. The money will eventually be deducted from your account by QuickBooks due to non-sufficient funds. However, you may still be responsible for the QuickBooks service fee. Report the incident to QuickBooks Payments so they are aware and can devise a solution. Note that the client may intentionally time the payment right before the end of the day to prevent you from reversing or voiding the transaction.
How can you prevent it?
While scammers will continuously devise new methods, there are several steps you can take to try and prevent such scams:
- Do not grant new clients control over your bank account. Request that clients sign a payment authorization form, allowing you to enter the payment information yourself. By maintaining control, clients cannot make the “error” that leads to the fraudulent process.
- Trust your instincts. If something feels off or suspicious about a client, it probably is.
- Consult your insurance agent to ensure your existing policies would cover incidents like this in case you fall victim to a scam.
- Remain vigilant, as scammers will always come up with new tactics.