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How to protect yourself from scams and fraud
How to protect yourself from scams and fraud
Updated over a week ago

The sad truth is, trade contractors are often the target of some very sophisticated scams. But you can protect yourself by being aware of how fraudsters think and operate, making sure you stay one step ahead of them.

Fraudsters know that trade contractors are hard working individuals with a lot on their plate. They will use that fact to their advantage by presenting themselves as a dream job, dream client, gaining the contractor’s interest and trust until they get what they need, then pulling the rug out and leaving the contractor in a financially painful bind.

A popular form of scam these days is something called advance-fee fraud, or a 419 scam, named for the criminal code it’s associated with.

The scam often goes something like this:

A contractor gets a call from a prospective client about a high paying job. The client is able to provide an address where the work is to be done, which at a glance checks out, and is willing to pay upfront, meaning the contractor can easily buy the supplies needed and even bring on a couple of workers without having to worry about when the final check will arrive to pay them.

And to top it all off, the client has their credit card ready to make the payment right away, meaning the money will be in your bank account in just a couple of business days and you’ll be ready to roll. What could possibly go wrong?

Well for one thing, there’s often a small catch. The client needs to hire another contractor for a different part of the job, for work you or your go-to guys can’t do, but it would make life so much easier for them if they could just pay you the full amount for the both of you then you could just give this guy his cut once it hits your account.

A little unusual, but this is a sweet job and the payment is right there for the taking so you decide to go along with it. Lo and behold, the money hits your account as promised. You send the other contractor their portion, maybe even buy some supplies and start work -- but then you never hear from the client again.

It turns out the address they gave belongs to someone else who is understandably upset that you’ve been doing unplanned work on their property.

Worse still, you end up getting a notice that the payment you received has been charged back, meaning the credit card company deemed this payment as invalid and took all the money back from the payment processor you used.

Now the payment processor is telling you they need to debit your bank account to get the full amount of the payment back, when a good chunk of it is already long gone and never coming back.

Suddenly that dream job has turned into a real life nightmare that will impact you and your business for years to come.

The good news is, if you’re using Joist Payments, we have protections in place to try and help you avoid situations like these. But no fraud-detection system is perfect, and the best way to avoid being the victim of fraud is to catch it before it even starts.

Here are some best practices you can use to help avoid falling into the fraud trap:

  • Be wary of potential clients who cannot meet with you in person, claim to be out of state or especially out of country.

  • Never agree to send a payment to a third party contractor unless you’ve done business with them in the past and know them to be reputable.

  • Don’t let a client rush you into accepting a payment from them. Even more so when the payment is for more than you would typically take for a job.

You’ve heard it said a thousand times before, but when something seems too good to be true, it often is. If you find yourself feeling this way about a prospective job or client, just make sure you know exactly what you’re getting into. Do some extra research, verify the owner of the property, who the client is, who their other contractor is, and make sure you feel confident that it all checks out.

You’ve probably heard this said a thousand times as well, but if you have any doubts, it’s better to be safe than be sorry.

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