GOOD BUSINESS PRACTICES FOR ENTREPRENEURS

1. GOOD BUSINESS PRACTICES FOR ENTREPRENEURS Ronna Brown THE BETTER BUSINESS BUREAU New York Public Library Science, Industry and Business Library Branch October 19, 2004 Thanks NY Public Library and co-speakers, FTC Also thanks to Bank of New York, sponsored project What is BBB: We believe in upholding and recognizing ethical business standards and practices in New York;� Thanks NY Public Library and co-speakers, FTC Also thanks to Bank of New York, sponsored project What is BBB: We believe in upholding and recognizing ethical business standards and practices in New York;�

2. Small Business Facts Over half of all employees in NY work for small businesses 99% of all businesses in state are small Questions for audience: Who is running small biz now? Who hopes to in next year? In next two years? Who is a lawyer � solo practice? You�re not alone � small business is critical to US economy 19.6 of NY small biz are minority owned, according to SBA; biggest increase of new owners is in people over 45 as new biz owners; the number of business owners over 55 increased 10% in last decade 474, 425 total small biz in NYS in 2002 In USA � there are over 21 million small businesses � and 14,000 large Questions for audience: Who is running small biz now? Who hopes to in next year? In next two years? Who is a lawyer � solo practice? You�re not alone � small business is critical to US economy 19.6 of NY small biz are minority owned, according to SBA; biggest increase of new owners is in people over 45 as new biz owners; the number of business owners over 55 increased 10% in last decade 474, 425 total small biz in NYS in 2002 In USA � there are over 21 million small businesses � and 14,000 large

3. Today�s Agenda BBB: Finding Capital and Keeping Customers FTC: Good Advertising and Avoiding Scams Questions and Answers

4. Entrepreneurs Hurdles and Rewards Initial Hurdles Create plan Get Financing Comply with regulations Staying in Business Hurdles Offer quality product/service Price competitively Market Rewards Lifestyle, Financial, Achievement of Dreams Why do you do what you do � or why do you want to do it? Rewards: own boss, earning potential are less limited, exciting Lots of hurdles to overcome � 60% of new businesses fail in first two years First � decide if being an entrepreneur is right for you: Self-starter, good at decisions, stamina to run a business, ability to plan, strong drive and family support the IDEA � what is your biz G.E.; Microsoft; more local � Goya Foods, J & R Music world, 1-800 Mattress; ABC Carpets � all hugely successful biz started by an entrepreneur. Why do you do what you do � or why do you want to do it? Rewards: own boss, earning potential are less limited, exciting Lots of hurdles to overcome � 60% of new businesses fail in first two years First � decide if being an entrepreneur is right for you: Self-starter, good at decisions, stamina to run a business, ability to plan, strong drive and family support the IDEA � what is your biz G.E.; Microsoft; more local � Goya Foods, J & R Music world, 1-800 Mattress; ABC Carpets � all hugely successful biz started by an entrepreneur.

5. At the Beginning Get Expert Advice Free Sources Business Associations Government Nonprofits Community Business Counselors Get Help With The Basics Business Plans and Loan Proposal Marketing and Selling Techniques Financing Local Laws and Licensing Best part of this brochure is last 5 pages of resources -- Get advice � even if you think you don�t need it � go and ask for it. lots of places with lots of experience. Take advantage. At very least, - NETWORKING OPPORTUNITY Be professional from the first meeting: Have answers to: kind of business, location ideas, be able to describe your skills and experience, know the kind of equipment or supplies you�ll need, give insurance coverage some thought, have a basic idea about the financing, know your own resources, consider how you will compensate yourself. Having thought this much through will help you create a professional image from your first meeting that will develop with each additional meeting thereafter. 2) RESEARCHING SMALL BUSINESS SERVICES: FREE INTERNET ACCESS POSSIBLE AT LIBRARY & COMMUNITY TECHNOLOGY CENTERS AT LOCAL NON-PROFITS Best part of this brochure is last 5 pages of resources -- Get advice � even if you think you don�t need it � go and ask for it. lots of places with lots of experience. Take advantage. At very least, - NETWORKING OPPORTUNITY Be professional from the first meeting: Have answers to: kind of business, location ideas, be able to describe your skills and experience, know the kind of equipment or supplies you�ll need, give insurance coverage some thought, have a basic idea about the financing, know your own resources, consider how you will compensate yourself. Having thought this much through will help you create a professional image from your first meeting that will develop with each additional meeting thereafter. 2) RESEARCHING SMALL BUSINESS SERVICES: FREE INTERNET ACCESS POSSIBLE AT LIBRARY & COMMUNITY TECHNOLOGY CENTERS AT LOCAL NON-PROFITS

6. Where�s the Money? Informal - Friends/Relatives/Business Owner Loans - Banks/Credit Unions Debt Financing Alternatives - Commercial Finance Co. Non-Profit MicroLenders/Govt Backed Programs - Empowerment Zones Selling Equity It takes money to make money � that old adage tends to be true for small biz. Lots of reasons you need to borrow since few can finance their business on their own:First issue to decide: - Do you need to borrow ? Let�s assume yes � so ask yourself the basic questions: what you are borrowing money for, how much you need, how long a time period to pay it back. Examples of why small business owners borrow money -- Start up � no revenue and lots of expenses Beyond start-up: upgrading equipment, sometimes because of govt. regs Financing production because of lag time between costs and payment Purchasing equpiment or vehicles Entering new area or beginning marketing essentially � a cash flow problem. IF cash flow problem is short term, may look at one set of options. Long term � probably need to borrow money. lets look at financing options. It takes money to make money � that old adage tends to be true for small biz. Lots of reasons you need to borrow since few can finance their business on their own:First issue to decide: - Do you need to borrow ? Let�s assume yes � so ask yourself the basic questions: what you are borrowing money for, how much you need, how long a time period to pay it back. Examples of why small business owners borrow money -- Start up � no revenue and lots of expenses Beyond start-up: upgrading equipment, sometimes because of govt. regs Financing production because of lag time between costs and payment Purchasing equpiment or vehicles Entering new area or beginning marketing essentially � a cash flow problem. IF cash flow problem is short term, may look at one set of options. Long term � probably need to borrow money. lets look at financing options.

7. Where�s the Money? Informal Network Create written document Don�t overextend Understand risk Friends � Relatives, Risk Relationship, put all in writing Need to live � don�t leave yourself totally broke Risk to money and collateral � you can lose it.Friends � Relatives, Risk Relationship, put all in writing Need to live � don�t leave yourself totally broke Risk to money and collateral � you can lose it.

8. Where�s the Money?Traditional Loans Banks Interest Rate Longterm/Shortterm Risk Factor Relationship/Partnership Start with assumption � banks want to lend money to people who will pay it back. Credit Unions, Nonbank lenders. Prefered source of long-term financing because usually the lowest interest rate. Interest rate depends on - how long you are borrowing money for and how creditworthy you are.. Banks perception of your character will matter: If your banker knows you will do everything in your power to repay a loan, it will help your loan application. Know your banker � and have them know you before you ask for a loan. Invite loan officer to see your business; Start with assumption � banks want to lend money to people who will pay it back. Credit Unions, Nonbank lenders. Prefered source of long-term financing because usually the lowest interest rate. Interest rate depends on - how long you are borrowing money for and how creditworthy you are.. Banks perception of your character will matter: If your banker knows you will do everything in your power to repay a loan, it will help your loan application. Know your banker � and have them know you before you ask for a loan. Invite loan officer to see your business;

9. Where�s the Money?Alternatives to Traditional Loans Vendor Credit Leasing Companies Factor Companies Customer Financing These all pertain to on-going businesses, in most instances Rules of the Road: Research all your Options, Negotiate, Understand all terms, how it impacts your daytoday operations and decisions, risks involved, tax consequences; get references, get advice from a trusted third party 1) VENDOR (OR TRADE) CREDIT: - USED WHEN BUSINESS MAKES MAJOR PURCHASE - PAID OVER TIME ON CREDIT FROM VENDOR - DON�T BE AFARID TO NEGOTIATE & COMPARE ALTERNATIVE FINANCING 2) LEASING COMPANIES: - LEASING EQUIPMENT AVOIDS LARGE IMMEDIATE CASH OUTLAY - AVOID OWNING OUTDATED EQUIPMENT - CHECK TAX EFFECT -COMPARE TO ALTERNATE FINANCING THAT GIVES YOU OWNERSHIP FIRST try to get lease where you can cancel 3) FACTOR COMPANIES:More costly because factor takes on risk. Usually 6 points above prime as compared to bank loan � usually 3 points above prime - THE �FACTOR� PURCHASES YOUR ACCOUNTS RECEIVABLE (MONEY OWED TO YOU) AT DISCOUNT FOR CASH - PROVIDES EARLIER CASH FLOW TO YOUR BUSINESS - RISKS ASSOCIATED W/ COLLECTION MAY OR MAY NOT BE TRANSFERRED TO FACTOR - BE WARY & ENSURE �FACTOR� IS REPUTABLE (THESE ARE YOUR CUSTOMER/VENDOR RELATIONSHIPS) - ASK FOR & CHECK REFERENCES 4) CUSTOMER FINANCING:Common wehre production takes a long time or is individual - MAJOR (OR POTENTIAL) CUSTOMER OF YOUR BUSINESS MAY PROVIDE SPECIAL FINANCIAL ASSISTANCE - ENSURE THAT REQUIREMENTS AR NOT TOO LIMITING FOR LONG-RUN Credit Cards � very common to use credit card as way to finance purchase. Interest rate high; make sure you can pay monthly payment; consider corporate card rather than personal These all pertain to on-going businesses, in most instances Rules of the Road: Research all your Options, Negotiate, Understand all terms, how it impacts your daytoday operations and decisions, risks involved, tax consequences; get references, get advice from a trusted third party 1) VENDOR (OR TRADE) CREDIT: - USED WHEN BUSINESS MAKES MAJOR PURCHASE - PAID OVER TIME ON CREDIT FROM VENDOR - DON�T BE AFARID TO NEGOTIATE & COMPARE ALTERNATIVE FINANCING 2) LEASING COMPANIES: - LEASING EQUIPMENT AVOIDS LARGE IMMEDIATE CASH OUTLAY - AVOID OWNING OUTDATED EQUIPMENT - CHECK TAX EFFECT -COMPARE TO ALTERNATE FINANCING THAT GIVES YOU OWNERSHIP FIRST try to get lease where you can cancel 3) FACTOR COMPANIES:More costly because factor takes on risk. Usually 6 points above prime as compared to bank loan � usually 3 points above prime - THE �FACTOR� PURCHASES YOUR ACCOUNTS RECEIVABLE (MONEY OWED TO YOU) AT DISCOUNT FOR CASH - PROVIDES EARLIER CASH FLOW TO YOUR BUSINESS - RISKS ASSOCIATED W/ COLLECTION MAY OR MAY NOT BE TRANSFERRED TO FACTOR - BE WARY & ENSURE �FACTOR� IS REPUTABLE (THESE ARE YOUR CUSTOMER/VENDOR RELATIONSHIPS) - ASK FOR & CHECK REFERENCES 4) CUSTOMER FINANCING:Common wehre production takes a long time or is individual - MAJOR (OR POTENTIAL) CUSTOMER OF YOUR BUSINESS MAY PROVIDE SPECIAL FINANCIAL ASSISTANCE - ENSURE THAT REQUIREMENTS AR NOT TOO LIMITING FOR LONG-RUN Credit Cards � very common to use credit card as way to finance purchase. Interest rate high; make sure you can pay monthly payment; consider corporate card rather than personal

10. Where�s the Money?Selling Equity Control Need business advisor Understand exactly what all the terms mean Selling equity means selling part of your business to others. Potentially means you lose some control - must know you are ready to let others share in decision making Venture capital firms provide money for growth, own part of biz, but tend to keep owner in charge of operations. Employee stock ownership � your employees work for less in return for ownership Corporate investmentSelling equity means selling part of your business to others. Potentially means you lose some control - must know you are ready to let others share in decision making Venture capital firms provide money for growth, own part of biz, but tend to keep owner in charge of operations. Employee stock ownership � your employees work for less in return for ownership Corporate investment

11. General Issues for Financing Risk as it relates to the owner Know your actual & perceived risk level personal credit score credit and borrowing history Prepare to make a Personal Investment (25% is typical ) Your experience and track record in business Create relationships � know loan officers Two things under the microscope � you and your business Regardless of which type of financing you are looking at - some basics: 1) RISK LEVEL for your business: two things � you (and partners) and your business - REDUCE BORROWING COSTS W/ LOWER RISK LEVEL - CREDIT HISTORY � Maintaining good credit:know your score;improve it - - EVIDENCE YOU ARE TRUSTWORTHY � Your character matters - SHOW A WELL MANAGED OPERATION 2) GET TO KNOW BANK LOAN OFFICER Two things under the microscope � you and your business Regardless of which type of financing you are looking at - some basics: 1) RISK LEVEL for your business: two things � you (and partners) and your business - REDUCE BORROWING COSTS W/ LOWER RISK LEVEL - CREDIT HISTORY � Maintaining good credit:know your score;improve it - - EVIDENCE YOU ARE TRUSTWORTHY � Your character matters - SHOW A WELL MANAGED OPERATION 2) GET TO KNOW BANK LOAN OFFICER

12. General Issues for Financing Risk as it relates to your business Collateral Business cash flow Equity in business Accurate records Your business plan and loan proposal 1) LARGER LOANS: PLEDGE PROPERTY/SECURITIES AS FINANCIAL BACKING 2) FOR SMALL BUSINESSES: HOME, PERSONAL ASSETS Records � Your accountant can ensure you are doing this well. Business Plan � A professional plan is critical. Get help doing it. Key ingredients in plan: Who you and other managers are - expertise General info: Yoru business description, history � type of business Marketing plans � how you sell, competition, trends Loan info � why you need it, how you will use it, how you will pay back, collateral, insurance Financial info. Insurance � most loans will require you have adequate insurance.1) LARGER LOANS: PLEDGE PROPERTY/SECURITIES AS FINANCIAL BACKING 2) FOR SMALL BUSINESSES: HOME, PERSONAL ASSETS Records � Your accountant can ensure you are doing this well. Business Plan � A professional plan is critical. Get help doing it. Key ingredients in plan: Who you and other managers are - expertise General info: Yoru business description, history � type of business Marketing plans � how you sell, competition, trends Loan info � why you need it, how you will use it, how you will pay back, collateral, insurance Financial info. Insurance � most loans will require you have adequate insurance.

13. Scams Targeting Small Businesses & Organizations 1) LARGER LOANS: PLEDGE PROPERTY/SECURITIES AS FINANCIAL BACKING 2) FOR SMALL BUSINESSES: HOME, PERSONAL ASSETS Records � Your accountant can ensure you are doing this well. Business Plan � A professional plan is critical. Get help doing it. Key ingredients in plan: Who you and other managers are - expertise General info: Yoru business description, history � type of business Marketing plans � how you sell, competition, trends Loan info � why you need it, how you will use it, how you will pay back, collateral, insurance Financial info. Insurance � most loans will require you have adequate insurance.1) LARGER LOANS: PLEDGE PROPERTY/SECURITIES AS FINANCIAL BACKING 2) FOR SMALL BUSINESSES: HOME, PERSONAL ASSETS Records � Your accountant can ensure you are doing this well. Business Plan � A professional plan is critical. Get help doing it. Key ingredients in plan: Who you and other managers are - expertise General info: Yoru business description, history � type of business Marketing plans � how you sell, competition, trends Loan info � why you need it, how you will use it, how you will pay back, collateral, insurance Financial info. Insurance � most loans will require you have adequate insurance.

14. Just the Facts Common scams Office supply fraud Yellow Pages invoice scams Public safety fundraising fraud Web site cramming fraud How they work Pointers to prevent losses Just the Facts The purpose of this presentation is to identify common scams that target small businesses and organizations, explain how they work, and provide some pointers to help you protect your organization against potential losses from these scams. Although the focus will be on office supply fraud, I also will discuss briefly yellow pages invoice scams, public safety fundraising fraud and Web site cramming. Just the Facts The purpose of this presentation is to identify common scams that target small businesses and organizations, explain how they work, and provide some pointers to help you protect your organization against potential losses from these scams. Although the focus will be on office supply fraud, I also will discuss briefly yellow pages invoice scams, public safety fundraising fraud and Web site cramming.

15. Office Supply Fraud Chronic problem Affects all types of businesses and organizations Companies lose $200 million annually Office Supply Fraud Office supply fraud is a serious, chronic problem, and all businesses and organizations are at risk � including franchisees, charitable organizations, places of worship, government offices and sororities and fraternities. The Imaging Supplies Coalition, an organization that combats telemarketing fraud and other illegal activities that affect its members and their customers, estimates that office supply fraud costs small businesses and non-profit organizations an estimated $200 million a year. Office Supply Fraud Office supply fraud is a serious, chronic problem, and all businesses and organizations are at risk � including franchisees, charitable organizations, places of worship, government offices and sororities and fraternities. The Imaging Supplies Coalition, an organization that combats telemarketing fraud and other illegal activities that affect its members and their customers, estimates that office supply fraud costs small businesses and non-profit organizations an estimated $200 million a year.

16. Trademarks of Office Supply Fraud A bill, statement or invoice that looks legitimate for: Toner Light bulbs Cleaning supplies Air canisters Tape First-aid kits Trademarks of Office Supply Fraud Office supply fraud occurs when small businesses or organizations are billed for merchandise, generally non-durable or consumable products, based on misrepresentations and false pretenses. The scam is often successful because the product being shipped is one that businesses normally order on a regular basis and the bogus bill sent by the fraudulent company looks just like the many legitimate invoices that arrive at a small business every day.Trademarks of Office Supply Fraud Office supply fraud occurs when small businesses or organizations are billed for merchandise, generally non-durable or consumable products, based on misrepresentations and false pretenses. The scam is often successful because the product being shipped is one that businesses normally order on a regular basis and the bogus bill sent by the fraudulent company looks just like the many legitimate invoices that arrive at a small business every day.

17. How the Scam Works Telemarketers state or imply that: They are calling from the regular, previous or �authorized� supplier It is time to reorder before prices go up They are calling to complete an existing order They are asking for confirmation to send previously ordered merchandise How the Scam Works Regardless of the product, office supply scams usually operate the same way. In boiler-rooms furnished with dozens of desks and telephones, telemarketers arm themselves with lists of companies and phone numbers, and they call. The telemarketers make the employee answering the telephone feel as if he or she is dealing with the regular supplier of office supplies. Sometimes, the caller states that it�s time to reorder before prices go up. Scam operators also may call and ask for �help� completing a pre-existing order, or merely ask for confirmation that it�s okay to send out previously ordered merchandise. The telemarketer�s phone call to a business or organization also sets the stage for the scam by asking for key information from the employee or volunteer answering the telephone. Such information typically includes the name of the employee or the name of the person in the office authorized to order supplies, and the serial number or brand of copier machine or printer used by the office. The telemarketer also may ask for confirmation of the business�s address or whether the business wants to receive a free gift. The primary purpose for the call, though, is to obtain information that makes the invoice for unordered merchandise look legitimate. How the Scam Works Regardless of the product, office supply scams usually operate the same way. In boiler-rooms furnished with dozens of desks and telephones, telemarketers arm themselves with lists of companies and phone numbers, and they call. The telemarketers make the employee answering the telephone feel as if he or she is dealing with the regular supplier of office supplies. Sometimes, the caller states that it�s time to reorder before prices go up. Scam operators also may call and ask for �help� completing a pre-existing order, or merely ask for confirmation that it�s okay to send out previously ordered merchandise. The telemarketer�s phone call to a business or organization also sets the stage for the scam by asking for key information from the employee or volunteer answering the telephone. Such information typically includes the name of the employee or the name of the person in the office authorized to order supplies, and the serial number or brand of copier machine or printer used by the office. The telemarketer also may ask for confirmation of the business�s address or whether the business wants to receive a free gift. The primary purpose for the call, though, is to obtain information that makes the invoice for unordered merchandise look legitimate.

18. How the Scam Works Telemarketers ask for: Name of the person that orders supplies Serial number and brand of equipment Confirmation of business address Does the business want a free gift? How the Scam Works The telemarketer�s phone call to a business or organization also sets the stage for the scam by asking for key information from the employee or volunteer answering the telephone. Such information typically includes the name of the employee or the name of the person in the office authorized to order supplies, and the serial number or brand of copier machine or printer used by the office. The telemarketer also may ask for confirmation of the business�s address or whether the business wants to receive a free gift. The primary purpose for the call, though, is to obtain information that makes the invoice for unordered merchandise look legitimate. How the Scam Works The telemarketer�s phone call to a business or organization also sets the stage for the scam by asking for key information from the employee or volunteer answering the telephone. Such information typically includes the name of the employee or the name of the person in the office authorized to order supplies, and the serial number or brand of copier machine or printer used by the office. The telemarketer also may ask for confirmation of the business�s address or whether the business wants to receive a free gift. The primary purpose for the call, though, is to obtain information that makes the invoice for unordered merchandise look legitimate.

19. Subsequent Events Supplies arrive at the office (not the kind usually ordered) Invoice follows several days later �Past due� invoices and collection efforts Subsequent Events A short time after the telephone call, cleaning supplies or light bulbs or toner cartridges arrive at the office. They�re not likely to be the brand, size or type the office usually orders. An invoice will follow, addressed to the attention of a person whose name was obtained over the telephone. The invoice follows several days later for two reasons: First, the price charged for the supplies often is inflated, a fact that is less obvious if the invoice arrives after the supplies have been received and put away. The invoice typically ranges from a few hundred dollars, up to $1,000. Second, it is likely that the victim will have opened the package and used the contents before the invoice arrives. Having done so, the victims feel obliged to pay for the products. After the office supplies and the deceptive invoice arrive, and if the business does not respond to the invoice, it will be sent additional invoices, often marked �past due.� Scam operators dedicate considerable resources to collection efforts, because, unfortunately, an organization that pays for unordered supplies may be targeted for additional scams. The fraud artists also count on the fact that a small business or organization will worry about its credit rating or reputation, and thus feel under pressure to pay even bills that are dubious.Subsequent Events A short time after the telephone call, cleaning supplies or light bulbs or toner cartridges arrive at the office. They�re not likely to be the brand, size or type the office usually orders. An invoice will follow, addressed to the attention of a person whose name was obtained over the telephone. The invoice follows several days later for two reasons: First, the price charged for the supplies often is inflated, a fact that is less obvious if the invoice arrives after the supplies have been received and put away. The invoice typically ranges from a few hundred dollars, up to $1,000. Second, it is likely that the victim will have opened the package and used the contents before the invoice arrives. Having done so, the victims feel obliged to pay for the products. After the office supplies and the deceptive invoice arrive, and if the business does not respond to the invoice, it will be sent additional invoices, often marked �past due.� Scam operators dedicate considerable resources to collection efforts, because, unfortunately, an organization that pays for unordered supplies may be targeted for additional scams. The fraud artists also count on the fact that a small business or organization will worry about its credit rating or reputation, and thus feel under pressure to pay even bills that are dubious.

20. Fighting Back When a business fights back,the scam artists . . . Bully the caller with litigation threats Try to negotiate a lower price Appeal to sympathy Charge a �restocking� fee Make the organization return supplies at its own expense Fighting Back Some businesses contact the scam operator and complain that the office supplies are unordered or that the price is too high. In these cases, scam operators react in predictable ways. The scam operator may try to bully the business by threatening, �they were ordered, and if you don�t pay, we can take you to court.� The scam operator might also try negotiating with the business to accept the goods at a lower price. After all, the goods and services are so overpriced that almost anything the seller gets is profit. The scam operator might also appeal for sympathy by stating, �we really need the business, I�ll let you have it for...� The scam operator may try charging you for returned supplies. He might say that he can accept returns if they are accompanied by a �restocking fee,� which often is more than the supplies are worth. The scam operator might also try to get the organization to return the supplies at its own expense. If you reasonably rule out that a legitimate mistake has not occurred, don�t pay to return the merchandise at your expense.Fighting Back Some businesses contact the scam operator and complain that the office supplies are unordered or that the price is too high. In these cases, scam operators react in predictable ways. The scam operator may try to bully the business by threatening, �they were ordered, and if you don�t pay, we can take you to court.� The scam operator might also try negotiating with the business to accept the goods at a lower price. After all, the goods and services are so overpriced that almost anything the seller gets is profit. The scam operator might also appeal for sympathy by stating, �we really need the business, I�ll let you have it for...� The scam operator may try charging you for returned supplies. He might say that he can accept returns if they are accompanied by a �restocking fee,� which often is more than the supplies are worth. The scam operator might also try to get the organization to return the supplies at its own expense. If you reasonably rule out that a legitimate mistake has not occurred, don�t pay to return the merchandise at your expense.

21. Why This Fraud Thrives Invoices appear legitimate Employees may not be familiar with regular vendors and the cost of supplies Employees may feel they have consented to the transaction The scam succeeds even when a business returns the supplies, pays a �restocking� fee, or negotiates a lower price Why This Fraud Thrives Office supply scams succeed because the invoices appear to be legitimate and so they often get paid. Employees of small businesses and volunteers at nonprofit organizations may handle bill payment duties sporadically, and may not realize how much supplies should cost and which vendors are the regular suppliers. Some businesses and employees may feel they consented to receive and pay for supplies, even though they were tricked. And, if a business returns the supplies to the fraudulent company, or pays it a �restocking fee,� or is convinced to pay a lower price for the supplies, the scam has succeeded because the fraudulent company has made a profit, or can ship the supplies to another potential victim. Why This Fraud Thrives Office supply scams succeed because the invoices appear to be legitimate and so they often get paid. Employees of small businesses and volunteers at nonprofit organizations may handle bill payment duties sporadically, and may not realize how much supplies should cost and which vendors are the regular suppliers. Some businesses and employees may feel they consented to receive and pay for supplies, even though they were tricked. And, if a business returns the supplies to the fraudulent company, or pays it a �restocking fee,� or is convinced to pay a lower price for the supplies, the scam has succeeded because the fraudulent company has made a profit, or can ship the supplies to another potential victim.

22. How to Protect Your Business or Organization Why This Fraud Thrives Office supply scams succeed because the invoices appear to be legitimate and so they often get paid. Employees of small businesses and volunteers at nonprofit organizations may handle bill payment duties sporadically, and may not realize how much supplies should cost and which vendors are the regular suppliers. Some businesses and employees may feel they consented to receive and pay for supplies, even though they were tricked. And, if a business returns the supplies to the fraudulent company, or pays it a �restocking fee,� or is convinced to pay a lower price for the supplies, the scam has succeeded because the fraudulent company has made a profit, or can ship the supplies to another potential victim. Why This Fraud Thrives Office supply scams succeed because the invoices appear to be legitimate and so they often get paid. Employees of small businesses and volunteers at nonprofit organizations may handle bill payment duties sporadically, and may not realize how much supplies should cost and which vendors are the regular suppliers. Some businesses and employees may feel they consented to receive and pay for supplies, even though they were tricked. And, if a business returns the supplies to the fraudulent company, or pays it a �restocking fee,� or is convinced to pay a lower price for the supplies, the scam has succeeded because the fraudulent company has made a profit, or can ship the supplies to another potential victim.

23. 1. Know Your Rights Don�t pay for unordered merchandise. Don�t return unordered merchandise. The Telemarketing Sales Rule offers protections It requires disclosures It prohibits telemarketers from misrepresenting material information Know Your Rights You can protect your small business or organization from becoming an office supply fraud victim. Here�s how: 1. Know your rights. If you receive supplies or bills for services you didn�t order, don�t pay, and don�t return the unordered merchandise. Once you�ve ruled out that an honest mistake may have been made, you may treat unordered merchandise as a gift. By law, it�s illegal for a seller to send you bills or dunning notices for unordered merchandise, or ask you to return it � even if the seller offers to pay for shipping. Further, if the seller sends you items that differ from your order in brand name, type, quantity, size, or quality � without your prior express agreement � you may treat the substitutions as unordered merchandise. The FTC�s Telemarketing Sales Rule offers additional protections. The Rule requires telemarketers to tell you it�s a sales call and who�s doing the selling before they make their pitch. They must tell you the total cost of the products or services they�re offering, any restrictions on getting or using them, and that a sale is final or non-refundable before you pay. It�s illegal for telemarketers to misrepresent any information, including facts about the goods or services being offered, such as brand name or quantity. Know Your Rights You can protect your small business or organization from becoming an office supply fraud victim. Here�s how: 1. Know your rights. If you receive supplies or bills for services you didn�t order, don�t pay, and don�t return the unordered merchandise. Once you�ve ruled out that an honest mistake may have been made, you may treat unordered merchandise as a gift. By law, it�s illegal for a seller to send you bills or dunning notices for unordered merchandise, or ask you to return it � even if the seller offers to pay for shipping. Further, if the seller sends you items that differ from your order in brand name, type, quantity, size, or quality � without your prior express agreement � you may treat the substitutions as unordered merchandise. The FTC�s Telemarketing Sales Rule offers additional protections. The Rule requires telemarketers to tell you it�s a sales call and who�s doing the selling before they make their pitch. They must tell you the total cost of the products or services they�re offering, any restrictions on getting or using them, and that a sale is final or non-refundable before you pay. It�s illegal for telemarketers to misrepresent any information, including facts about the goods or services being offered, such as brand name or quantity.

24. 2. Use Purchase Controls Consider assigning a designated buyer Use purchase orders Send a copy of every purchase order and bill of lading to accounts payable or designated staff 2. Use Purchase Controls 2. Assigning a designated buyer is a good idea. For each order, the designated employee should issue a purchase order to the supplier with an authorized signature and a purchase order number. The order form should instruct the supplier to note the purchase order number on the invoice and bill of lading. The buyer should send a copy of every purchase order to your accounts payable department or employee who pays the bills. Keep blank order forms secure. Check your documentation before paying bills. When merchandise arrives, the receiving employee should verify that it matches the shipper�s bill of lading � paying special attention to brands and quantity � and your purchase order. Refuse merchandise that doesn�t conform. If everything�s in order, the employee should send a copy of the bill of lading to your accounts payable department or employee you designate to handle bills. 2. Use Purchase Controls 2. Assigning a designated buyer is a good idea. For each order, the designated employee should issue a purchase order to the supplier with an authorized signature and a purchase order number. The order form should instruct the supplier to note the purchase order number on the invoice and bill of lading. The buyer should send a copy of every purchase order to your accounts payable department or employee who pays the bills. Keep blank order forms secure. Check your documentation before paying bills. When merchandise arrives, the receiving employee should verify that it matches the shipper�s bill of lading � paying special attention to brands and quantity � and your purchase order. Refuse merchandise that doesn�t conform. If everything�s in order, the employee should send a copy of the bill of lading to your accounts payable department or employee you designate to handle bills.

25. 3. Train Your Staff Instruct employees on how to respond to telemarketers Employees should refer callers to the designated buyer Require telemarketers to get a purchase order 3. Train Your Staff 3. Train your staff. It�s a good idea to train new and existing employees and volunteers on how to respond to telemarketers. Advise employees who are not authorized to order supplies and services to say, "I�m not authorized to place orders. If you want to sell us something, you must speak to ______________ and get a purchase order." Buy from people you know and trust. Authorized employees should be skeptical of "cold" or unsolicited calls and should not give out information on office equipment (such as brand name or serial number). They should feel comfortable saying "no" to high pressure sales tactics. Legitimate companies don�t pressure you to make a snap decision. Finally, consider asking new suppliers to send a catalog first. To assist training efforts, the FTC has available a new Tip Sheet to give to new and existing staff on detecting and avoiding office supply scams. Besides office supply fraud, there are a few other common scams that target small businesses and non-profit organizations.3. Train Your Staff 3. Train your staff. It�s a good idea to train new and existing employees and volunteers on how to respond to telemarketers. Advise employees who are not authorized to order supplies and services to say, "I�m not authorized to place orders. If you want to sell us something, you must speak to ______________ and get a purchase order." Buy from people you know and trust. Authorized employees should be skeptical of "cold" or unsolicited calls and should not give out information on office equipment (such as brand name or serial number). They should feel comfortable saying "no" to high pressure sales tactics. Legitimate companies don�t pressure you to make a snap decision. Finally, consider asking new suppliers to send a catalog first. To assist training efforts, the FTC has available a new Tip Sheet to give to new and existing staff on detecting and avoiding office supply scams. Besides office supply fraud, there are a few other common scams that target small businesses and non-profit organizations.

26. Yellow Pages Invoice Scams The solicitation has the appearance of an invoice It may bear the logo and feature the name �Yellow Pages� It may falsely suggest the publisher is your local telephone company It may lead you to believe your business has already been listed in the directory and you are now being billed Yellow Pages Invoice Scams That mail invoice bearing the familiar "walking fingers" logo and the name "Yellow Pages" could be a camouflaged invitation to lose money. Unscrupulous promoters are soliciting advertising for online, "bogus" or nonexistent business directories. Although these directories appear to be legitimate Yellow Pages publications, they are not distributed to the public, posted on the web, or promoted as promised. As a result, the directories - if they exist at all - offer no benefits to businesses that pay to advertise in them. The solicitation to buy ad space may look like an invoice and bear the "walking fingers" logo and the Yellow Pages name, but neither the name nor the logo is protected by federal copyright or trademark registration. That's how fraudulent promoters are able to lead businesses to believe they are affiliated with local telephone directories distributed in a particular area. Fraudulent operators also may lead you to believe that your business already has been listed in the directory and you now are being billed. Yellow Pages Invoice Scams That mail invoice bearing the familiar "walking fingers" logo and the name "Yellow Pages" could be a camouflaged invitation to lose money. Unscrupulous promoters are soliciting advertising for online, "bogus" or nonexistent business directories. Although these directories appear to be legitimate Yellow Pages publications, they are not distributed to the public, posted on the web, or promoted as promised. As a result, the directories - if they exist at all - offer no benefits to businesses that pay to advertise in them. The solicitation to buy ad space may look like an invoice and bear the "walking fingers" logo and the Yellow Pages name, but neither the name nor the logo is protected by federal copyright or trademark registration. That's how fraudulent promoters are able to lead businesses to believe they are affiliated with local telephone directories distributed in a particular area. Fraudulent operators also may lead you to believe that your business already has been listed in the directory and you now are being billed.

27. Avoiding These Scams Check out the company and publication Call local Yellow Pages publisher Ask for a copy of a prior edition Ask for online address and call advertisers Ask for written information regarding publication, distribution and circulation Check with consumer protection agencies Contact local postmaster or postal inspector Avoiding These Scams Before you buy advertising space through a mail solicitation or pay a Yellow Pages "invoice," take the following steps: 1. Check out the company and its publication. Call your local Yellow Pages publisher to see if it is affiliated with the soliciting company. 2. Ask for a copy of a previous directory edition. 3. Ask for the online directory's Web address and call advertisers in the directory to ask if their listing has been a good buy. 4. Ask the publisher for written information about where the directory is distributed, how it is distributed (does every local telephone customer receive it?), how often it is published, and distribution or circulation figures. 5. Check with your local and state consumer protection agencies to determine if any complaints have been filed about the publisher. 6. If you think you've been scammed by a promoter pitching bogus Yellow Pages or business directories, contact your local Postmaster or Postal Inspector. Avoiding These Scams Before you buy advertising space through a mail solicitation or pay a Yellow Pages "invoice," take the following steps: 1. Check out the company and its publication. Call your local Yellow Pages publisher to see if it is affiliated with the soliciting company. 2. Ask for a copy of a previous directory edition. 3. Ask for the online directory's Web address and call advertisers in the directory to ask if their listing has been a good buy. 4. Ask the publisher for written information about where the directory is distributed, how it is distributed (does every local telephone customer receive it?), how often it is published, and distribution or circulation figures. 5. Check with your local and state consumer protection agencies to determine if any complaints have been filed about the publisher. 6. If you think you've been scammed by a promoter pitching bogus Yellow Pages or business directories, contact your local Postmaster or Postal Inspector.

28. Public Safety Fundraising Fraud Raising money for local police or fire personnel Selling advertising that will appear in local law enforcement journals Raising money to help fight drug abuse in the schools or community Public Safety Fundraising Fraud Every day, police and firefighters risk their lives to make your community safer. To show your support, you may consider making a donation when a fundraiser calls from a fire or police service organization. Before you write the check, consider these facts: Simply having the words "police" or "firefighter" in an organization�s name doesn�t mean police or firefighters are members of the group. Just because an organization claims it has local ties or works with local police or firefighters doesn�t mean contributions will be used locally or for public safety. Most solicitations for police and fire service organizations are made by paid professional fundraisers.Public Safety Fundraising Fraud Every day, police and firefighters risk their lives to make your community safer. To show your support, you may consider making a donation when a fundraiser calls from a fire or police service organization. Before you write the check, consider these facts: Simply having the words "police" or "firefighter" in an organization�s name doesn�t mean police or firefighters are members of the group. Just because an organization claims it has local ties or works with local police or firefighters doesn�t mean contributions will be used locally or for public safety. Most solicitations for police and fire service organizations are made by paid professional fundraisers.

29. Blowing the Whistle Ask for identification Ask how your contribution will be used Call to verify legitimacy If you cannot verify legitimacy, report telemarketer Be wary of �special treatment� offers Don�t be intimidated! Blowing the Whistle Taking the following precautions can help ensure that donation dollars will benefit the people, organization, or community you want to help. 1. Ask fundraisers for identification. Many states require paid fundraisers to identify themselves as such and to name the organization for which they�re soliciting. 2. Ask how your contribution will be used. Ask what percentage of your contribution will go to the fire or police organization, department, or program. Also ask if your contribution will be used locally. Get written information. 3. Call the organization or your local police or fire department to verify a fundraiser�s claim to be collecting on behalf of the organization or department. If the claim cannot be verified, report the solicitation to your local law enforcement officials. 4. Be wary if a fundraiser suggests you�ll receive special treatment for donating. For example, no legitimate fundraiser would guarantee that you won�t be stopped for speeding if you have a police organization�s decal in your car window. Don�t feel intimidated about declining to give. A caller who uses intimidation tactics is likely to be a scam artist. Report the call to your local law enforcement officials. Blowing the Whistle Taking the following precautions can help ensure that donation dollars will benefit the people, organization, or community you want to help. 1. Ask fundraisers for identification. Many states require paid fundraisers to identify themselves as such and to name the organization for which they�re soliciting. 2. Ask how your contribution will be used. Ask what percentage of your contribution will go to the fire or police organization, department, or program. Also ask if your contribution will be used locally. Get written information. 3. Call the organization or your local police or fire department to verify a fundraiser�s claim to be collecting on behalf of the organization or department. If the claim cannot be verified, report the solicitation to your local law enforcement officials. 4. Be wary if a fundraiser suggests you�ll receive special treatment for donating. For example, no legitimate fundraiser would guarantee that you won�t be stopped for speeding if you have a police organization�s decal in your car window. Don�t feel intimidated about declining to give. A caller who uses intimidation tactics is likely to be a scam artist. Report the call to your local law enforcement officials.

30. Website Cramming Scams The �Offer� Free website Nominal fee Cancel anytime The �Catch� Sites contain limited information Sites are not listed with major search engines Website Cramming Scams If you're interested in using the Web to expand your small business, be cautious. Some unscrupulous companies, claiming to provide free Web design and hosting services, are billing small businesses for services that were never authorized and have little value. The bogus charges usually appear on businesses' phone bills - an illegal practice known as "cramming" - or on fraudulent invoices. For example, you may get a call from a company offering you a free, 30-day Web site. They say you can continue the service for a nominal fee, say $25 or $30 a month, and cancel at any time. Some service providers state that you'll be billed automatically after the 30-day period; others claim you won't be billed after the 30 days unless you tell them you want to continue the service. Before or after explaining the offer, the provider asks for basic information about your company, and tells you that your free Web site will be up and running within a week. In fact, unscrupulous service providers bill you, whether you authorize the services or tell the provider that you want to cancel. Moreover, many of the services have little value because these providers design and host sites that contain limited information about the business, and most of the sites are not listed with major search engines. If customers can't find your site, it's worthless to your bottom line.Website Cramming Scams If you're interested in using the Web to expand your small business, be cautious. Some unscrupulous companies, claiming to provide free Web design and hosting services, are billing small businesses for services that were never authorized and have little value. The bogus charges usually appear on businesses' phone bills - an illegal practice known as "cramming" - or on fraudulent invoices. For example, you may get a call from a company offering you a free, 30-day Web site. They say you can continue the service for a nominal fee, say $25 or $30 a month, and cancel at any time. Some service providers state that you'll be billed automatically after the 30-day period; others claim you won't be billed after the 30 days unless you tell them you want to continue the service. Before or after explaining the offer, the provider asks for basic information about your company, and tells you that your free Web site will be up and running within a week. In fact, unscrupulous service providers bill you, whether you authorize the services or tell the provider that you want to cancel. Moreover, many of the services have little value because these providers design and host sites that contain limited information about the business, and most of the sites are not listed with major search engines. If customers can't find your site, it's worthless to your bottom line.

31. Don�t Get �Crammed� Treat unordered services as a gift Review phone bills promptly Assign purchasing to designated staff Document purchases Train your staff on how to deal with telemarketers Buy from those you know and trust Don�t Get �Crammed� You can protect your business from losing money to unordered Web Site Cramming. Here's how: 1. Know your rights. If you receive bills for services you didn't order, don't pay. The law allows you to treat unordered services as a gift. 2. Review your phone bills as soon as they arrive. Be on the lookout for charges for services you haven't ordered or authorized. If you find an error on your bill, follow the instructions on your statement. 3. Assign purchasing to designated staff, and document all your purchases. 4. Train your staff on how to respond to telemarketers. Advise employees who are not authorized to order services to say, "I'm not authorized to place orders. If you want to offer or sell us something, you must speak to ______________." 5. Buy from people you know and trust.Don�t Get �Crammed� You can protect your business from losing money to unordered Web Site Cramming. Here's how: 1. Know your rights. If you receive bills for services you didn't order, don't pay. The law allows you to treat unordered services as a gift. 2. Review your phone bills as soon as they arrive. Be on the lookout for charges for services you haven't ordered or authorized. If you find an error on your bill, follow the instructions on your statement. 3. Assign purchasing to designated staff, and document all your purchases. 4. Train your staff on how to respond to telemarketers. Advise employees who are not authorized to order services to say, "I'm not authorized to place orders. If you want to offer or sell us something, you must speak to ______________." 5. Buy from people you know and trust.

32. Where to Complainand Get More Information Federal Trade Commission 1-877-FTC-HELP (382-4357) www.ftc.gov FTC, Washington, DC 20580 State Attorney General www.naag.gov Local Consumer Protection Office Better Business Bureau www.bbb.org Don�t Get �Crammed� You can protect your business from losing money to unordered Web Site Cramming. Here's how: 1. Know your rights. If you receive bills for services you didn't order, don't pay. The law allows you to treat unordered services as a gift. 2. Review your phone bills as soon as they arrive. Be on the lookout for charges for services you haven't ordered or authorized. If you find an error on your bill, follow the instructions on your statement. 3. Assign purchasing to designated staff, and document all your purchases. 4. Train your staff on how to respond to telemarketers. Advise employees who are not authorized to order services to say, "I'm not authorized to place orders. If you want to offer or sell us something, you must speak to ______________." 5. Buy from people you know and trust.Don�t Get �Crammed� You can protect your business from losing money to unordered Web Site Cramming. Here's how: 1. Know your rights. If you receive bills for services you didn't order, don't pay. The law allows you to treat unordered services as a gift. 2. Review your phone bills as soon as they arrive. Be on the lookout for charges for services you haven't ordered or authorized. If you find an error on your bill, follow the instructions on your statement. 3. Assign purchasing to designated staff, and document all your purchases. 4. Train your staff on how to respond to telemarketers. Advise employees who are not authorized to order services to say, "I'm not authorized to place orders. If you want to offer or sell us something, you must speak to ______________." 5. Buy from people you know and trust.

33. Federal Trade CommissionFederal Trade Commission

34. Customers Easier to keep a current customer than find a new one What do customers want Quality product Respect/Appreciation

35. Customer RetentionTypical BBB Complains Mistreatment Inadequate Complaint Handling Lack of Contact Information Product or Service Defect Failure to Deliver Product/Service 1) DEFECT � � IMPLIED WARRANTY� THAT ITEM IS GOOD ENOUGH TO SELL 2) FAILURE TO DELIVER: -LAW MAY REQUIRE NOTIFYING CONSUMER OF OPTION TO CANCEL OR ACCEPT A SUBSTITUTE1) DEFECT � � IMPLIED WARRANTY� THAT ITEM IS GOOD ENOUGH TO SELL 2) FAILURE TO DELIVER: -LAW MAY REQUIRE NOTIFYING CONSUMER OF OPTION TO CANCEL OR ACCEPT A SUBSTITUTE

36. Customer RetentionTypical BBB Complains Misrepresentation /Expectations Refund Refusal Deceptive Advertising Misusing Private Customer Information 1) DELIBERATELY MISLEADING CUSTOMERS: NOT HONORING PRICES, WARRANTIES, AVAILABILITY 2) MISUSING CUSTOMER INFORMATION: COUNTER THIS BY CREATING PRIVACY & DATA SECURITY POLICY 1) DELIBERATELY MISLEADING CUSTOMERS: NOT HONORING PRICES, WARRANTIES, AVAILABILITY 2) MISUSING CUSTOMER INFORMATION: COUNTER THIS BY CREATING PRIVACY & DATA SECURITY POLICY

37. CustomersCommon Mistakes Frontline Staff cannot Resolve Rigid in Solutions Doing Nothing Lack of Sympathy

38. Customer RetentionGood Practices Listen Reason Keep Calm Find a Specific Resolution Goodwill Counts Your Customer�s Complaint Matters 1) REFLECTIVE REASONING � SHOWS CUSTOMER THAT YOU HAVE HEARD & UNDERSTAND THEIR CONCERNS Your Customer Defines Success � you want them to leave satisfied, not you 2) EVEN IF YOU DISAGREE, CAN SHOW SYMPATHY AND APOLOGIZE FOR THEIR EXPERIENCE1) REFLECTIVE REASONING � SHOWS CUSTOMER THAT YOU HAVE HEARD & UNDERSTAND THEIR CONCERNS Your Customer Defines Success � you want them to leave satisfied, not you 2) EVEN IF YOU DISAGREE, CAN SHOW SYMPATHY AND APOLOGIZE FOR THEIR EXPERIENCE

39. Customer Complaints Mediation Fast, Fair, Flexible Confidential Requires Good Faith Mediation is the second choice- first is to fix issue informally. Should be able to do that 99% of time.Mediation is the second choice- first is to fix issue informally. Should be able to do that 99% of time.

40. Legal Compliance�Ignorance is not Bliss� Federal, State, Country, and City Laws Seek Professional Help Legal Forms of Business Ownership Tax Laws Required Licenses or Permits Employment and Labor Law Consumer Laws 1) PROFESSIONAL HELP: BUSINESS ADVISORS, ATTORNEYS & ACCOUNTANTS 2) DETERMINE ADVANTAGES/DISADVANTAGES OF VARIOUS FORMS OF LEAGAL OWNERSHIP (E.G., PARTNERSHIPS, CORPORATIONS, LLCs) 1) PROFESSIONAL HELP: BUSINESS ADVISORS, ATTORNEYS & ACCOUNTANTS 2) DETERMINE ADVANTAGES/DISADVANTAGES OF VARIOUS FORMS OF LEAGAL OWNERSHIP (E.G., PARTNERSHIPS, CORPORATIONS, LLCs)

41. CONTACT THE BBB THE BETTER BUSINESS BUREAU Servicing Metro New York, Long Island, and the Mid-Hudson Region www.newyork.BBB.org inquiry@newyork.BBB.org Telephone: 212-533-7500

42. THANK YOU