Is your business vulnerable to scammers?

on October 20, 2015

Most people at some part of their lives have fallen victim, or nearly fell victim to some sort of a scam.   The types of scams seem endless and despite awareness efforts by a number of different organizations, scamming seems to be a big time endeavor and apparently profitable.

Business’s are just as vulnerable as individuals to scams, in fact, a business may be more vulnerable as a number of weak links exist in terms of untrained employees, lack of inter-department communication and some cases a general lack of concern by some employees concerning the financial impact of their judgment on the business that pays them.

There are literally hundreds of scams that one can read about. Since Packnet’s focus is on industrial packaging and shipping, we thought we would list a couple that directly affect shipping and storage.

The phony shipping company

There are several variations of this, but the gist of the scam is this: Someone will place a large order of product with a far away shipping location.  The order is paid by credit card which may include fairly substantial shipping costs.   At some point in the buying process the customer notifies the supplier that they want to use “their own” shipping company.   They ask if either the supplier could issue a check back to them for the shipping costs or to pay by check directly to the shipping company.  If the credit card did not include the shipping costs, the customer says that they will send a check or money order to cover the shipping.

The credit card was stolen or invalid, the money order was bogus and the shipping company if there was one is just a front for the scammer.   The credit card transaction is initially approved by your merchant account only to be reversed later.  The ultimate bank for the credit card may be a foreign bank that can take days to verify a transaction.   The worst case scenario for the business is that someone got thousands of dollars worth of product from them AND they paid the scammer $1500.00 to $4000.00 for bogus shipping.

What are some red flags?

The first flag is with the initial inquiry that asks for availability of a product that you carry.   The inquiry is by email and it asks if you accept credit card payment. Normally an inquiry would include “What is the cost?”,  “How soon can it be shipped?”, “What are the specifications?”. It is very unlikely that the first question would be about credit card payment.  Often there are grammatical and spelling errors on the email.   The email address of the requester is a free Gmail or yahoo account as opposed to a business email account.

The second flag may be in regards to the shipping company. It probably has a name that you never heard of and you might have trouble finding it in internet searches.

A third flag may be the distance that your product needs to be shipped if it is a product that is commonly available at local stores.   Why would someone need to ship a commonly available product across the country?

A fourth flag may be that the buyer does not directly speak to anyone in your company, only email transactions or a relay operator for hearing impaired. Its one thing to buy shoes at an ecommerce site, but making a large transaction usually involves other contact than just an email.

Other flags could include mismatched addresses on the credit card with the shipping address, or an international time stamp on the email.

The bogus supply deal

Someone calls up the person at your company who is in charge of shipping supplies such as tape, boxes etc.   They usually name drop by indicating that some high level executive with your company (like the president) told them that you would be able to help them out.

The person ends up having a huge amount of shipping/stockroom supplies that they can sell to you at a fraction of their cost.   They usually have some story to go along with it, such as someone going out of business, or a non-profit organization, hospital or school that had some event or deal fall through.   Anyway they want you to benefit from their misfortune by getting supplies at a great price.   The story somehow includes that company high ranking official and they want you to believe that not buying these supplies could get you in trouble.

So the company ends up buying several hundred dollars of supplies. The supplies are actually low quality and worth about half of the discount price you paid.  Some of the boxes may not even have any supplies in them, but no one is going to fret over a small order of shipping tape.

Most of the scammers end up with a few hundred dollars, which for most medium or large businesses, is too miniscule for anyone to worry about. This is what the scammer is counting on.   No one is going to follow up or try to pursue or prosecute someone over a few hundred dollars.

What are some red flags?

When a scammer calls, the phone number Identifier is usually blocked or shows up as something generic. If someone is representing a company or organization, then one would expect the ID to be the from that organization.

Name dropping while a common sales technique is a little out of place for shipping supplies and the likelihood that the president of the company would really steer someone to the shipping department is close to zero.

The bogus order

A salesman calls up the plant manager and starts schmoozing with him. Talks about his last visit (never happened) ask about the manager’s back (who doesn’t have a bad back?).  He may even bring up the special cutlery set that the manager gets for being such a loyal customer.   The plant manager doesn’t remember him, but as busy as he is, he doesn’t remember a lot of people.

The salesman then says “by the way, I got those supplies you ordered”.   Again the salesman apologizes for being late, coming up with some story about how the factory screwed the order up etc.   He ends up saying that he just needs the PO number to ship it.

Well the plant manager, who is busy, gives the salesman a PO number.   The product is shipped.  Of course contents are cheap and it cost 3 times what it was worth, but the plant manager has too many other things on his plate to check on pricing etc.   It might be an order for $500.00.  So nobody at the company is going to sweat over that.

One of the reasons that businesses are susceptible to these type of scams is the cost involved is too small for anyone to worry about. The scammer knows this and keeps himself “under the radar” by not charging too much money.  After all, there are thousands of businesses out there.  Most of these scammers would be called out or hung up on if the person answering the phone had just a healthy bit of skepticism:

  • If the request or inquiry is unusual to begin with, be very suspicious.
  • If something seems too good to be true, it probably is.
  • Sometimes just asking for more information about the use and the organization is all that is needed to ferret out scams. Any legitimate organization would gladly tell you more about themselves or send you information, or give you a legitimate phone number to call.   Remember that anyone can throw a website up, so don’t assume that a website makes a company legitimate.

For larger businesses, it would be worthwhile to provide some scam awareness training to your new employees.   Especially for younger employees who tend to be a bit more naïve.