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Feb 01 2013 Odds It's Fraud |
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Business credit fraud is an intentional plot to scam a business out of "value" without payment. This may be accomplished by providing a credit department with carefully crafted inaccurate information hoping that it goes unnoticed thus allowing the flimflam artist to get away with as much value as possible.
Let's look at an attempted fraud scenario that happened recently in Utah.
An NACM member received a phone order from a caller in Ohio declaring that they had a "staple emergency" and needed product to be "shipped immediately" through their preferred shipping agent. The member contacted the shipping agent through the Hotmail email address provided and requested a freight quote. An International Shipping Quote was received. The Member received an email from the customer's Gmail account with instructions to ship overseas and to send them an invoice for full amount of project (product plus freight). Credit card information was provided for payment. The Member was instructed to pay several thousand dollars in freight charges upfront to ship the material. This is where the red flags went up.
The Member asked for the name on the credit card and was given a man's name. When they called MasterCard to verify they were informed that the card had been issued to a woman.
When your gut feel tells you something is wrong - start reading between the lines and look deeper. Let's take a closer look at the warnings signs of fraud in this scenario.
Payment upfront - If a customer asks you to advance costs (or pay upfront in their behalf) be cautious. Even if you've been given payment in the form of a credit card, a check or even a cashier's check, you may get left holding the bag when you find out the money is not there. Always verify funds are received before paying up front or refunding money. Asking for the name on the card, the billing address, zip code, card authorization number - any and all information you can as a standard procedure is a good business practice.
Does it make sense? Why is someone in Ohio calling Utah to order material to ship to Denmark? Are there closer sources of supply for this product? Is the request routine to your business or is it unusual?
Email addresses - The shipping company had a Hotmail address, the potential customer used a Gmail address. Legitimate businesses normally deal through business email address accounts. The email address on the quote was @pacific-ocean.com. A Google search of pacific-ocean.com results in something in the eyeglass industry.
Company name - One word in the company name was in a different font and looked awkward. The use of the word "freights" in the company name makes us wonder is this legitimate? The plural of freight is freight. Someone in the freight industry would know that.
Poor spelling, grammar, punctuation or awkward wording can be a warning sign. The document in this scenario had inconsistent capitalization of words in the text.
Phone number - A "Toll Free (303)" number is listed on the shipping quote. Area code 303 is not a toll free prefix. A reverse phone number search showed that the number belongs to a cell phone in Denver, Co.
Address - Entering the address on the quote into Google Maps produced an aerial photo showing a small Ohio lakeside marina (the name of the marina pops up). You can see small personal water craft in slips (not commercial size crafts) with structures onsite that appear to be mobile homes. Hey wait a minute - the entire neighborhood appears to be a mobile home trailer park.
Unsolicited orders are frequently a warning sign. A sales force works hard to develop new business. New customers that fall out of the blue usually are too good to be true.
Emergency - must be shipped immediately! Part of this hustle is to get people to react to the urgency rather than pay attention to details. The harder a potential customer pushes, the more wary a credit manager should be.
Must use our _________ (in this case shipping agent). To complete this shell game we need someone with a different cup to catch the funds paid up front.
Kudos to Granite Seed Company for spotting and avoiding this attempted fraud and allowing us to explore this as an example. |