The numbers tell a sobering story: More than half of U.S. businesses lose over 30% of their money to vendor scams each year. Even more alarming? It happens a lot. More than 40% of businesses faced seven or more scam incidents in 2024, with the two biggest culprits being fake vendors and bills for work that was never done. Footnote1Opens overlay
These aren’t just statistics — they’re real problems that can derail your business. Here’s what that looks like on the ground.
Start with a solid contract
When vendors disappear with your money or deliver shoddy work, a strong contract is often the difference between a quick solution and an extended, expensive headache. Think of it like a seatbelt for your business: You hope you never need it, but you’ll be really glad to have it when things go wrong.
Here’s what every contract should include:
- A detailed scope of work that explains exactly what the vendor is going to do, with no room for confusion
- A delivery schedule with specific completion dates that spell out when they’re going to do it
- Payment terms that protect both sides by specifying the cost and when you’ll pay
- Performance standards you can measure that define what acceptable work looks like
- Clear remedies stating how problems will be resolved if deadlines slip or work quality falls short
- A termination clause that details how either side can walk away if things aren’t working out
The key is being specific. Vague language leads to vague results, and the more detailed your contract is now, the less you’ll have to argue about later.
Choose payment strategies that protect you
Even with a solid contract, fake vendors may still find ways to take advantage. That’s why your payment strategy can be just as important as your contract, giving you some practical ways to protect your business:
- Start small: Try a test project first. A small initial project lets you see how they work, communicate and handle payments before you commit to something bigger.
- Pay as they go: Build progress payments into your strategy. Break big projects into clear milestones, and tie payments to contracted work. No progress? No payment.
- Use secure payment methods: Credit and debit cards are your friends here. They give you ways to fight back if things go wrong — like disputing charges or flagging suspicious activity. Most business scams use wire transfers and ACH. If a vendor doesn’t accept card payment, it could be wise not to pay up front without a strong contract in place.
- Keep records of everything: Make documentation part of your process. Save emails, take pictures, keep notes. Document every payment — when it was made, what it was for and any related communications.
The bottom line? Your payment strategy is one of your best lines of defense. Using credit cards and secure digital payments leaves a trail of documentation that can help protect your business.
What to do when vendor services aren’t delivered
Let’s face it — sometimes a project goes sideways. The obvious clue is when nothing gets delivered, like a website that never materializes. But the signs can also be more subtle, and the sooner you spot them, the better your chances of protecting your business:
- Deadlines keep moving with vague explanations.
- The work quality suddenly drops or looks poorly done.
- Your calls start going to voicemail more often.
- Progress reports become increasingly unclear.
When you notice these signs, it’s time to act. Here’s your step-by-step plan:
Document everything immediately
- Save all emails, texts and other communications.
- Take photos of any incomplete or problematic work.
- Gather your contracts, invoices and payment records.
- Write down a timeline of events while they’re fresh in your mind.
Make a professional attempt to resolve things
- Send a clear, detailed email outlining the exact terms of your agreement.
- Propose concrete solutions and next steps.
- Set a reasonable but firm deadline for their response.
- Keep your tone professional and focused on facts.
If they still don’t deliver
- Contact your credit card company to dispute any recent charges.
- File a police report.
- File reports with relevant authorities like the Better Business Bureau or the Federal Trade Commission.
- Reach out to your industry associations for guidance.
- Consider whether legal help makes sense for your situation.
The key is to stay professional throughout the process. Even when you’re frustrated, it’s important to keep your communications businesslike and focused on solutions. Not only does this give you the best chance of resolving the matter, but it also creates a clear record of your reasonable attempts to fix the problem, in case you need to escalate things later.
