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

Shining A Light On Fraud.
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Join John and Jack as they delve into the topic of business fraud within small companies, focusing on home service industries. Discover how to identify and prevent fraud in this insightful podcast episode. Learn from John's firsthand encounters with external and internal fraud attempts, such as a shocking incident involving attempted blackmail via Google reviews. Jack also shares his experiences, including subcontractor misconduct and service theft. Gain valuable insights and practical strategies to protect your business from fraud.

Episode Hosts: 🎤
John Wilson: @WilsonCompanies on Twitter
Jack Carr: @TheHVACJack on Twitter

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John Wilson, CEO of Wilson Companies

Jack Carr, CEO of Rapid HVAC

Owned and Operated Episode #113 Transcript

John Wilson: 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 going to 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.

Jack Carr: This episode is sponsored by Home Service Engine. So, this is a company that I would highly recommend if you are thinking about getting onto ServiceTitan, or if you're like me, and you have to rebuild your ServiceTitan every few months because you set it up incorrectly. So this is my go to team for any ServiceTitan needs, and I really wish I had them from the start.

Give them a call today and start utilizing ServiceTitan to its fullest potential.

John Wilson: 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, kinda crazy but a good conversation.

John Wilson: Welcome back.

Jack Carr: To owned and operated. What's going on, John?

John Wilson: Living the dream.

Jack Carr: I heard you've been having a fun day.

John Wilson: 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.

Jack Carr: The sauce.

John Wilson: 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

Jack Carr: What does that look like?

John Wilson: 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 going to give us a hundred bad reviews.

So he sent us like fake test 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 because 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 going to 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 a hundred 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. Because 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 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, we got that through our ServiceTitan tracking link. Like, I can, I have the messages for that review request. So we were able to sort of prove back,

Jack Carr: it's so interesting that you bring this up now because we had a potential like competitor who I think just left us a bad review, not in the system. The whole deal. 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 sub thread on Reddit that was all about what you're talking about right now. And it goes back like six years. Like this has been a thing for a while. Luckily, I feel like your business can absorb that says that they only generally do like one or two, but your business can absorb that.

The guy who I was reading about who's saying, Google, help me, Google, help me. And like, there's just no help to him. He had five reviews. Like absolutely destroying his Google business. Like that's a 1 percent or almost 1%. He's now a four star or one point, excuse me, but wild how happens in it.

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.

John Wilson: They said they would remove it if they can prove that the hundred reviews were against their terms of service. I have the phone call recorded. Cause 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 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 a hundred 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. They said something mean. I don't know what to tell you

Jack Carr: Except that it actually hurts your physical business which is wild.

John Wilson: 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 going to 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.

Jack Carr: Bingo.

John Wilson: going to make it continue to look real.

And we're going to have to continue to respond in kind.

Jack Carr: Yeah, it's more so a time sink.

John Wilson: So this was for someone how to do it? Like, teaching people how to fraud businesses?

Jack Carr: Yeah. Well, what I was reading in the threads was that they only generally do one or two, and that they're, the hope is that after they do those one or two, 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, six 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 thousand dollar fee or whatever, and just get them out of here. Like, just get out of 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.

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

Jack Carr: Yeah,

John Wilson: 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.

Jack Carr: Google's holding no accountability

John Wilson: And Google's like, Yeah, so you have to talk to your local police department. What in the hell is my police department gonna do with that? And we give you guys a million dollars 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.

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

John Wilson: Bing's like, oh my god, one user!

Jack Carr: 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 going to go and do the side work on that job after hours weekends. 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?

John Wilson: Which part?

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

John Wilson: Yeah, I mean, if someone's doing side work with our customers and we find out you're fired.

Jack Carr: Yeah.

John Wilson: We make that explicitly clear on day one and we believe it.

Jack Carr: Paperwork that says like side work is that we define it as this and this is where it takes place. 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 or if somebody misspoke. And so we're waiting for a few calls back today from the people who we went out to.

So it'll be interesting, but fraud in business is just, I mean it's prevalent,

John Wilson: Dude, I mean, 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. Yeah. 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.

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

John Wilson: Like, we had a case a couple 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. It 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.

Jack Carr: 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 going to set up those processes. Like we were thinking about doing a sub location. What do you call it? Like a cosignment.

And now I'm thinking like, Man, how am I going to manage that? I just have to trust that the team is not going to go in there off hours and take X, stuff. Z,

John Wilson: And then it's camerasand then it's all that stuffs.


Jack Carr: You guys use key cards, right?

John Wilson: Yeah, we use keycards, 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 five or six 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 gonna steal? Cause obviously, like, you're okay with that. So, we've had a number of terminations. Just on that fact alone, I think three. Like, property damage of someone else's property the scene, didn't tell us all.

Jack Carr: Yeah 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 the forward and backward camera Are you guys doing that as well?

John Wilson: Yep, cameras and vehicles. 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, 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.

Jack Carr: Yeah, it removes the opportunity at all points which is really really nice.


John Wilson: So what we've done, like, just over the years, 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 gonna talk about maybe that's, like, how we're gonna do purchase orders or how we're gonna use credit cards or how we're gonna, 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 two or three weeks, after saying it a lot, seven ten 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 three 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.

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

John Wilson: And I think it change that too because I go into those meetings and

Jack Carr: Like here's the carrot.

John Wilson: It's like guys i'm a carrot than the stick guy.

Today we're talking about the carrot in two or three 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 out of the park and they did a great job for me.

Jack Carr: Yeah, have I told you the New Jersey story? So one of my first employees that I hired after, cause 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 three months. Three 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 to go help your mom out. There was a failure to mention in this that your mom lived three 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 him go off.

John Wilson: Yeah. Just have thick skin. 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

Jack Carr: Yeah, exactly.


John Wilson: 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 hmm. been my accountant for 20 years, she's never taken a vacation, cause if she does, someone's gonna 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 two check signers? Who's allowed to transfer money? Who's allowed to create new bank accounts? often do you check new bank accounts?

GPS on equipment.

Jack Carr: With GPS on equipment geo fencing, which we have now, they do great jobs being able to say, Hey, 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 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.

John Wilson: 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, 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 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. It happens. A lot. So, what, have thick skin,

Jack Carr: protect yourself

John Wilson: 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 them quick. Cause if someone's gonna do property damage to a team member or do anything like that, like that is not something 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.

Jack Carr: Sweet. today. That's wild.

John Wilson: Fraud in small businesses. Working title.

Jack Carr: You need fraud insurance or something. Neat. Well, great episode today. Want to listen to more like share, follow, sign up for the newsletter. We have our workshop in

John Wilson: June 6th.

Jack Carr: June 4th through the 6th,

John Wilson: I think 10 seats down, which will be fun and like, 30 people's target. So we're doing pretty good. We're early April, so we'll probably end up selling at a month early again, which is kind of fun. So then we'll do a third one in September.

Jack Carr: Yeah, after summer.

John Wilson: Yeah. doing fun. My mission make friends and teach people. So it seems like we're doing it.

Jack Carr: Yeah, doing a good job. I got an email today from one of the guys in the workshop. Just talking shop saying that he's happy. He's utilizing what we taught him. So it's kind of cool getting that

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

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 at Wilson companies.

I'll see you next time.

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