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Business Credit Fraud is Alive and Well
By Karen Buckingham

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I recently received a check drawn on a U.S. bank for $17,000+ along with a message from one of our salespeople that he had been in contact with a new customer that wanted the merchandise shipped to an end user in Nigeria. I contacted the bank and was told that the maker of the check had a moderate 7 figure account balance. I pulled a Dun and Bradstreet ® report and found the buyer was rated 5A2! So far, so good.

I contacted the salesperson and asked for a copy of any relevant documents. I received copies of a series of email messages, a letter of introduction, and a purchase order. In spite of the fact that I had a check in hand, I remained concerned about the order pending for a number of reasons, including:

  • 5A2 companies do not normally pay for goods in advance....they usually expect and receive open account terms.

  • The order was unsolicited...which in credit fraud circles is a red flag.

  • The shipment was to be sent to Nigeria, but nothing I read in the credit report indicated that the buyer was an exporter

  • The product ordered did not match the buyer's line of business

I called the buyer's CFO. I was referred to the accounting manager. She was cautious at first. When I explained that I was simply trying to verify that her company had issued the check and that the purchase order received was legitimate, she became more cooperative. She asked me to fax a copy of the check, as well as a cover sheet [on company letterhead] listing my questions.

The next morning the buyer's CFO called. He told me the check was a forgery. He added that this was the second time this had happened in the last month. He told me the other company that had received a forged check had shipped the merchandise and had lost a lot of money. The shipment was sent by overnight delivery service to Nigeria - so it arrived before the check was returned by the buyer's bank.

Frauds can be clever and elaborate, or simple and easy to identify and thwart such as this one. If there are any lessons to be learned from this situation, they are:

  • When in doubt, ask questions - even if you feel uncomfortable or you think that it makes you look paranoid

  • Always look a gift horse [or a gift order] in the mouth

  • Use common sense... ask yourself if it makes sense that a customer of a particular size in a particular industry would be buying your company's products, and in the quantities ordered

  • Refuse to be rushed into releasing an order pending even when the order in question is a "hot, rush" order as this one was.

6/24/02 Edition, All Rights Reserved

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