We almost got into a payrolling scam

The Attempt to Scam Us

This is a short story about how people try to scam small businesses, like us.

One of the services we provide is “Payrolling” also known as “Employee Leasing.”  It’s a way that other small businesses can hire people without becoming an “employer” by letting us process their payroll.  It works really well to help small, one person companies, or companies paying cash to people because they don’t want to be an employer, to grow without a lot of administration and all of the back office work that it takes to process payroll, handle worker’s comp audits, deal with unemployment claims, and more.

Recently we got a request for information about payrolling from a very anxious person in Ohio.  That might have been the first clue since he wanted to start in a week, which might have been possible if they were a Wisconsin company, but a new state would take a week or so to set up.

The second clue that this was a scam was the discrepancy between his employee counts:  15 one time vs 55 another, but it could have been a typo, so we’ll take another step or two, as skepticism grew.

The third, and now the kind of clue that makes that little voice in your head say, “SCAM,” was that the business he represented was shown as “permanently closed” on Google.  Buuut, he said he was reopening it….er, ok…we’ll take another step.

He was really anxious…”Can we be ready in 7 days, how about 14 days,” “my employees can’t wait that long,” “I’ll send the W4s to you and you can process payroll starting Monday.”  (I’d explained that I needed more documentation than just W4s.)

So, he sent W4 documents.  55 of them that would probably represent a bi-weekly payroll of $60,000.  Funny thing:  All of the W4s looked like they were written by the same person.  One of the people on them was dead.  He wouldn’t work to produce I-9 documentation or Ohio withholding forms, or a 941 showing what his last payroll costs were.

By now, it was clearly a scam, but I called the parent company and learned that the business was really closed, and it was the second time someone tried to use this scam on the same property!

And in the 10 days this was playing out, two more companies reached out for payrolling.  Coincidence?  Probably not, but they didn’t make it past my first set of questions which helped to identify a scam earlier.

The game ended when he called me to tell me how badly he was being treated because I didn’t answer any of the 13 calls and texts that he made and sent within 20 minutes.  I finally picked up one and I said I knew it was a scam, which he denied, until I listed why it was, and advised him that I provided documentation to law enforcement….the phone went click and we avoided being scammed out of a significant amount of money or be a part of a money laundering scam.

The morale of the story is, if it smells like a scam, it probably is.