#113 - Fraud Unveiled: Navigating Small Business Scams & Safeguards

I'm John Wilson. Welcome to Owned and Operated. Twice a week we talk about home service businesses, and if you're a home service entrepreneur, then this is gonna be the show for you. We talk about our own business in residential plumbing, HVAC, and electric, and we also talk about business models that we just find interesting. Let's get into it.

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Today on Owned and Operated, Jack and I talk about fraud in small business, what it looks like, how to identify it, and how to protect yourself. We both today had a couple examples happen from outside and inside parties. So kind of crazy, but a good conversation. Welcome back.

To Owned and Operated. What's going on, John?

Living the dream.

I heard you've been having a fun day.

It's been a good day. We had some cool new positions start. So we're launching some teams that I am not going to talk about. I told Kristen, we're not allowed to talk about it for a year. I can just talk about the fact that it happened.

The sauce.

So that's fun. Too many of our competitors listen to the show, which thanks guys. I appreciate the listens, appreciate the email subs. And then towards the end of the day, someone attempted to blackmail us. On like Google reviews. So they got on our Google reviews.

What does that look like?

Dude, so they message us on our GMB and they say, hey, you didn't pay us for the review work we did. And we're like, I don't even know what that means. And he starts like crafting the message and it turns out he's like attempting to make it look like we paid them for fraudulent reviews and that we didn't pay them money. So they're gonna give us 100 bad reviews. So he sent us like fake text messages and it was like a whole thing. And then I was like, hey, can you send some examples of like the work you did? 'Cause we're confused. We're not sure what it is that you're talking about. And he sent an example of a customer that I've personally worked in their home. And I'm like, yeah, buddy, that ain't it. But we called Google and Google was like, we're not gonna do anything. Until they leave reviews and then it has to be against our terms of service. So we're just like, so this guy could just leave us 100 negative Google reviews, which is what he's threatening to do. And if we don't pay him some amount of money that we don't owe for a fraudulent activity that we didn't order, and they can't do anything. And we have to like go through the whole process on our end. 'Cause at first we weren't like engaging, but then it was like, I think we really need to engage because otherwise it's going to look like we did do it.

Yeah.

Or like we weren't responsive to someone's thing. So Google won't remove the reviews if this guy does it. So we had to go through the whole, like, this isn't real, which fortunately he helped out with because he sent reviews that he's like, hey man, I did this review for you guys. And I'm like, that is literally this invoice number from this date. And this is the job we did. And we got that through our ServiceTitan tracking link. Like I have the messages for that review request. So we were able to sort of prove back.

It's so interesting that you bring this up now because, um, we had a potential like competitor who I think just left us a bad review, not in the system, the whole deal.

Yeah.

Nowhere to be found. Maybe a different name, who knows? And so I went down the rabbit hole of looking at like, what does Google do for these things? And I actually came upon a subthread on Reddit that was all about what you're talking about right now. And it goes back like 6 years. Like this has been a thing for a while. Luckily, I feel like your business can absorb. It says that they only generally do like 1 or 2, but your business can absorb that. The guy who I was reading about who's saying, Google, help me, Google, help me. And like, they're just no help to him. He had 5 reviews, like absolutely destroying his Google business. Like that's a 1% or almost 1%. He's now a 4-star. Or one point, excuse me, but wild how that happens. And it's more wild that my hope was that they've changed it since like 2018, but it sounds like it's obviously still prevalent.

They said they would remove it if they can prove that the 100 reviews were against their terms of service. I have the phone call recorded because we called them the moment we got this sort of blackmail threat and we're like, hey, this is what's happening. We spend like half a million dollars or more with you guys a year. Like, and maybe that's nothing, but I feel like it deserves answering the phone. And, uh, this guy's literally blackmailing us. Like, how can you help us? Can you lock out our reviews? Can you block this user? Like, what can you do? And their response was, well, you go to law enforcement. I'm like, what is Stowe, Ohio's police department gonna do with someone in South Africa dropping 100 fake reviews on my GMB? Like, that's the most nonsensical answer I've ever heard in my life. Like, it's your platform. Like, it's not law enforcement, it's your platform. So Yeah, it's just crazy. That's like someone saying something mean to you on Twitter and being like, well, you gotta go talk to the cops. It said something mean. I don't, I don't know what to tell you.

Except that it actually hurts your physical business, which is wild.

Yeah. There's very real damage. But they said they would remove it if they could prove it was against their Google terms of service. So then after that, we were like, okay, we have to prove that this wasn't us. Like we didn't do this. Now, I don't know if it's over. Like we'll find out in a day. Like what I think this guy's gonna do, He's faking a lot of information to make it look real. So I think he's probably going to fake a request from someone in our company.

Bingo.

He's going to make it continue to look real and we're going to have to continue to respond in kind.

Yeah. It's more so a time sink.

So this was for someone how to do it, like teaching people how to fraud businesses.

Yeah. Well, what I was reading in the threads was that they only generally do 1 or 2 and that they're, the hope is that after they do those 1 or 2, they're going to come back and say, pay us now. Or we'll do more. And then they just like, 'cause in another note, I mean, with AI and everything, it's much easier now than it was, like I said, 6 years ago when I was reading those. But I can imagine a world where they create a bunch of accounts, but at the same time, I can also imagine like how many people pay the $1,000 fee or whatever and just get them outta here. Like, just get outta here. Go. I'd say it's probably a decent amount of that. It's a scare tactic. Versus the reality of actually doing it. But I mean, I hope that's the case.

We hope, I mean, we hope he leaves us alone and we hope it's not a thing.

Yeah.

But it is crazy that like one GMB message could like wreck an hour and a half. And it's not even like a customer, it's like literally fraud and he's accusing us of fraud and it's just like, come on.

And Google's holding no accountability whatsoever. Yeah.

And Google's like, yeah, so you have to talk to your local police department. What in the hell is my police department going to do with that? And we give you guys $1 million a year or whatever. And I get that we're not like Apple or something, but like, I don't know. There has to be some level of customer service here for the amount of money that we give them. Just a sort of a wild experience.

It's just wild because they're the monopoly. So they just, who cares? Go somewhere else. Kick rocks. Go to Bing. Bing's like, please.

Bing's like, oh my God, one user.

Yeah. Right. We actually ran into something similar today, not in the GMB fraud case, but we had questionability from a sub that is potentially going out and doing the job that we bid and that we were subbing out to them. We didn't win the job, but there's potential that they're gonna go and do the side work on that job after hours, weekends.

Yeah.

So we are currently dealing with a similar fraud. instance. You've had to have run into that though. Like, how do you guys manage that at such a large scale?

Which part?

People stealing customers via after-hours side work and/or stealing customer base just because they're cheaper. Theft of service almost.

Yeah. I mean, if someone's doing side work with our customers and we find out, you're fired. That's it. We make that explicitly clear on day one and we believe it.

Paperwork that says like side work is That we define it as this and this is where it takes place. Yeah. If it's our customer and that's our thing. So we are currently going through to find out if that is actually the case. Yeah. Or if somebody misspoke. And so we're waiting for a few calls back today.

Yeah.

From the people who we went out to. So it'll be interesting, but fraud in business is just, I mean, it's prevalent.

It's kind of wild. Yeah. We both had interesting days today. We had a subcontractor, actually we're their subcontractor, and they pulled a permit Against my license. We don't know anything about this job. We don't know anything about this customer. We don't know anything about this house. And I'm exposed because someone just was able, we don't even know how, to pull a permit under my license. It's people just out there doing whatever.

Yeah. And it, it seems to exacerbate the bigger you get. And I think it's just cuz more stuff falls through the cracks, but like, that's why we're dealing with it now.

Like we had a case a couple of years ago where people would just buy things on our accounts, like random people. Oh, Wilson's a big company. Let's charge on their famous account. They won't even notice. So yeah, like it's a thing, basically from every single side. So we've talked about it on here before. I've talked about it in general, but like, you basically have to assume that someone and many people are stealing from you at every single moment. It's just best to assume it, then you can build process around protecting yourself.

Yeah. I mean, that's huge. That's huge. And then I think it's also important to understand too, because these kind of things have changed my mindset in how we're gonna set up those processes. Like we were thinking about doing a sublocation, what do you call it? Like a, a cosignment. And now I'm thinking like, man, how am I gonna manage that? I just have to trust that the team is not going to go in there off hours and take X, Y, or Z.

And then it's cameras and then it's all that stuff.

Yep. You guys use key cards, right?

Yeah, we use key cards. So we know everyone's scan-ins, we know everyone's scan-outs. Inventory's locked and caged. And there's cameras everywhere. And those have been good. Like we catch things and like we have employees listening to this and I know that and like, they know there's cameras everywhere. They see them everywhere. But like, you see a lot. We've had a lot of instances of like, Property damage of other people's property. So like someone will back into someone else's truck. That's happened like 5 or 6 times, like personal truck, and then just like leave and not tell anyone. So we've had a few terminations just for that. Like, that's just like lack of integrity. Like you just damaged someone's property, drove off and didn't tell anyone. That's a character flaw. And if you do that to one of your team members, what are you going to do in a customer's home? How much damage are you going to cause and not tell anybody? Or what are you going to steal? Because obviously, like, you're okay with that. So, uh, we've had a number of terminations just on that fact alone. I think 3, uh, like property damage of someone else's property, left the scene, didn't tell a soul.

Yeah. Um, and so when you're building around that, sounds like, do you do cameras in vehicles too? Because I know Chris Hoffman was a big proponent of forward and backwards camera. Are you guys doing that as well?

Yep. Cameras in vehicles. Um, that's a new thing. They've just been putting them in over the last few months. But mainly like, we need to know if accidents are our fault. We need to know if you're texting and driving. My general philosophy is it is easier to force people to do what you want than to ask them. So when you're thinking about building process, I just had this discussion with my controller, Steve, the other day where it's like, hey, this person's doing this thing and I don't want them to do it. Well, I'm like, okay, well, did we cut off their access to do this thing? No. Well, let's cut off their access because like it's easier.

Yeah.

If there is no circumstance that they should ever do this thing, then they should never have access to do this thing. Otherwise, they might do it on accident. They might do it on purpose, but like, it serves us no benefit to have a conversation about something that's unnecessary. Let's cut it off and let's be done with it.

It removes the opportunity at all points, which is really, really nice.

So what we've done, like just over the years of, as we think about process, I have a general like carrot, then the stick mentality. So like, if I'm going to come and talk about a new process or a new thing that we're going to talk about, maybe that's like how we're going to do purchase orders or how we're going to use credit cards or how we're going to run a process in accounting, like whatever it is, the change management styles, it's carrot, then the stick. So, hey, here's the thing that we're doing and here's how it benefits you. And here's how it benefits the team. I'm going to drive that in for a few weeks through L10s. Through one-on-ones, through talking to their manager. That's the carrot. Here's how it benefits you. Here's how it benefits the team. Here's the change. Here's the why. And then after 2 or 3 weeks, after saying it a lot, 7 to 10 times, comes the stick. You've already been told, you know why it benefits the team. You know why it benefits you. And if you're not doing it at this point, it's because you're being belligerent. So then comes the stick. That's my general philosophy for change management. I'm not a let's take 3 months to change things type of guy. Especially if it's like important to the business and I've overly communicated why it's important to the business, we expect a quick get on board. And if it's a win for you, which it almost, you know, almost always is.

Yeah, no, that's definitely a good philosophy. I've heard that one as well.

And I think just communicate that too, because I go into those meetings and—

Here's the carrot.

It's like, guys, I'm a carrot, then the stick guy. Today we're talking about the carrot. In 2 or 3 weeks, if we're having an issue, it's going to be the stick. But like either way, we are going to do what I need to get done here. Hey, this episode is sponsored by Service Scalers. So Service Scalers is actually a brand that I've used personally with our companies for a little bit over a year now. They've helped us manage our digital advertising. Frankly, they did a lot better than our last agency. Leads went through the roof and cost per click went way down. Check out Service Scalers if you're a plumbing, HVAC, or electrical home service company. That's what they knock outta the park and they did a great job for me. Yeah.

Have I told you the New Jersey story?

No.

So one of my first employees that I hired after, cuz I was by myself with like one other guy, asked me if he could go do work at his mom's house, side work, and all of his stuff was in his van. I said, yeah, man, of course. Like real nice. Hey, yeah, of course. Like your tools are in your van. I don't mind. Not a big deal. Don't think about it again for 3 months. 3 months later at the business, I get a letter and the letter's a toll. We are a Nashville company. The toll was from New Jersey with a picture of my van crossing a toll bridge. And I say, hey, what the hell is this? Like, seriously, you told me I could go take my tools to go help your mom out. There was a failure to mention in this that your mom lived 3 states away and another 10,000 miles of driving, like absolutely a ridiculous above and beyond. So the point of that, which I learned really quickly was, yeah, don't do that again. But also realistically that people are going to try to take advantage of you at every single step along this process. Now that you're a business owner and you really need to focus on protecting yourself throughout that process. We let them go after us.

Yeah. Just have thick skin.

Yeah.

I'll give some actionable insight. We've talked about this before, but like really the big thing is just assume that a lot of people are stealing from you at any given moment because they are like, that is the reality of what's happening.

Yeah, exactly. But it drives good change, right?

Yeah. People are like, oh yeah, there's no way that would happen to me. Like, I know accountants have stole millions of dollars, but that would never happen to me. I have Betty Lou. She's been my accountant for 20 years, she's never taken a vacation because if she does, someone's going to find all the fraud. Like, it's very common. So the way you think about building process is how do you lock access? How do you have 2 check signers? Who's allowed to transfer money? Who's allowed to create new bank accounts? How often do you check new bank accounts?

GPS on equipment with GPS on equipment with geofencing, which we have now, they do a great job being able to say, hey, your truck is not moving. Or it's moving out of the area. Actually, we met with Enterprise for Fleet Management and they say, well, we actually work with your gas card supplier and we'll let you know if there's double purchases. Like we know what the mileage of this truck is. We know that what they bought and then we know what they bought again the next day is nothing adding up. There's companies out there that are trying to help you, but I think the key takeaway from this whole conversation is that at every single point in time, there's going to be somebody taking an opportunity if you present that opportunity. So constantly being very intentional about removing those opportunities, like you said, before they even start or before they become an issue.

Yeah. Being vigilant, building process around it, requiring receipts. There's a lot. I mean, people steal, people steal a lot. And the bigger the company, the more complicated it is to control it. And outside, like this whole fraud thing was ridiculous, or like someone running a permit under my name and license number. Like, that's insane. I could be exposed to real insurance issues by someone else's decision and in a county dropping a permit under my name. So like I have exposure to this thing that some random homeowner decided to do. They committed fraud. Like it happens a lot. So what, have thick skin.

Protect yourself.

Protect yourself. Build a lot of process around assuming that people are stealing from you inside and out. So that way you can limit it as much as possible, make it difficult. And the moment someone shows low integrity, you fire 'em quick. Because if someone's gonna do property damage to a team member or do anything like that, like that is not someone you want in your business. 'Cause where else will they cause damage? Where else will they cause a problem and they won't tell you?

Sweet. Good talk today. That's wild.

Fraud in small businesses. Work and title. Yeah.

You need fraud insurance or something. Neat. Well, great episode today. Want to listen to more? Like, share. Follow, sign up for the newsletter. Uh, we have our workshop in June.

June 4th through the 6th.

June 4th through the 6th.

I think 10 seats down, which will be fun. And like 25 to 30 people's target. So we're doing pretty good. We're early April, so we'll probably end up selling out a month early again, which is kind of fun. So then we'll do a 3rd one in September.

Yeah. After summer.

Yeah. We'll just keep doing 'em. They're fun. My mission is to make friends and teach people. So seems like we're doing it.

Yeah. Doing a good job. I got an email today from one of the guys in the workshop, just talking shop. Nice. Saying that he was happy. He's utilizing what we taught him.

That's awesome.

So it's kind of cool getting that feedback.

Yeah. I've gotten some DMs, people getting their, like an LSA review or people following up with like a question on this one thing. And I'm like, yeah, this is cool.

Yeah. Sweet.

All right. Thanks for the listen. Tune in next time. Thanks for tuning in to Owned and Operated, the podcast for home service entrepreneurs. If you enjoyed today's episode, please hit the like button and subscribe to the podcast. If you have any questions or topics you'd like us to cover, feel free to reach out. You can find me on Twitter at @WilsonCompanies. I'll see you next time.