Business fraud consists of dishonest and illegal activities committed by individuals or companies who target businesses - large or small - in order to make a profit.
Pickford in Edmonton was targeted by a business scam, but thankfully they followed their processes, trusted their instinct, and communicated with each other to quash the scam.
In June 2019, a standard request from a customer Pickford had previous orders from (Air Products) came through. The product order (PO) numbers were correct, and it was a common request item, which totalled $22,616.
Once the order was set, the client had asked the shipment to be sent to an Air Products facility in Missouri. However, Brad, a Pickford representative, found it odd, since they typically don’t ship to the United States. Instead, he suggested the shipment should go to the Air Products facility in Edmonton. The client said he preferred it was sent to the United States address and proceeded to have Brad send their order via UPS.
Brad facilitated the request and gave a shipping quote, but the client failed to send the proper customs labels to complete the UPS process. The client tried multiple times to send customs labels, but they were incorrectly filled out each time – and the shipping address and contact name were different on each label. The client started sending rude and aggressive emails and called Brad with the same aggressive and demanding tone. This behaviour was a substantial red flag to Brad, so he talked with his coworkers about this unusual situation. One of his colleagues searched online for one of the addresses that was provided on the UPS documents. It showed a non-descript building and had multiple reviews that stated the building was being used for scams.
Brad went to the Air Products company website to find their contact information to confirm the legitimacy of the client and the order. He contacted Air Products’ Security Operations, who confirmed that they had been a common target over the last six to eight years by scammers who would pose as their employees to defraud other businesses. In fact, the FBI were even investigating the fraudsters who were committing the same business scams in the United States.
In the end, Pickford only lost $660 in shipping costs, but they were fully reimbursed. “I went back into the files and really looked at each document. That’s when I noticed the small inconsistencies. I couldn’t believe I got taken,” Brad explained. “It was a good lesson that was thankfully learned for a low cost.”
Business Fraud Details
Scammers create websites for fraudulent or ‘fake’ businesses with unique names, create businesses that have a similar naming convention of an existing business, or completely mirror/clone the websites of existing businesses.
- These fraudulent websites may contain stolen images of employees found on legitimate company websites or social media accounts (such as Facebook or LinkedIn) where employees have indicated their company name and their role in the company.
- They also portray services provided by a known company/business with contact information that will connect you with the scammer, not the legitimate business.
When individuals contact the scammer through the fraudulent website, the scammer will then socially engineers the individual to provide personal and/or financial information, pay for fraudulent fees by way of purchasing gift cards, Bitcoin or making a third-party deposit into an account. The accounts may be associated to the scammer or they could belong to other victims who are being used as a money mule to move the scammer’s money, thereby insulating the scammer.
Account Fraud/Takeover Scam
- Cell phone ported
- Telephone call
- Text message
Scammers are impersonating the following types of businesses to collect fraudulent fees, utilizing to open fraudulent accounts or add services to accounts owned by legitimate account holders:
- Companies with online shopping sites – Amazon, BestBuy, Costco
- Companies with online buy/sell platforms – Craigslist, Kijiji
- Companies who offer support for electronic devices - Apple Support, cell phones, Microsoft (technical support and software)
- Collection agencies - collecting debt for outstanding accounts
- Account departments for online dating sites
- Account departments for local service companies such as utilities and municipal services
- Social media platforms to confirm account status
- Financial institutions to confirm account status
Method of Payment:
- Cash – in-person or through a courier, such as FedEx
- Charged to victim's monthly payment method
- Credit card
- Debit to victim's bank account
- Gift Cards - Google Play cards, STEAM cards, iTunes cards, prepaid credit cards
Email Compromise/Email cloning
- Get into a person or business’s email using Malware
- Create an email very similar to company/business to trick and defraud the company/business and clients of the business.
- Send invoices either from the company to clients or to the company from vendors that have been fraudulent altered with payment going to the scammer or a money mule.
- To facilitate an inheritance, insurance, prize or some type of monetary payment scammers will use documents from legitimate businesses and alter them to include the scammers information leaving the legitimate business's information for ‘authenticity’.
Business employee impersonation
- Personate employee of company to solicit money for fees or expenses from an individual allegedly owed to company/business.
- Personate an employee of a company to request payroll changes for a legitimate employee of a business/company
Protect your business:
- Verify that the email is coming from a legitimate source.
- Be aware of irregular requests for purchase.
- Implement increased precaution when sending funds/making purchases.
- Prior to shipping merchandise, call the phone number the customer provided and verify the transaction information.
- Be sensitive to priority shipments for fraud‐prone merchandise, which may indicate a fraudulent transaction.
- Be aware of orders that occur with a request for urgent shipment, especially if the shipping address does not match the billing address of the payment card provided.
- Be aware of orders from repeat customers that differ from their regular spending pattern.
- Contact your processor and ensure security measures are established to prevent victimization and reduce unwanted chargebacks.
- Merchants who accept Card-Not-Present orders can better avoid fraud by using the automated verification tools supplied by their acquirer and the payment associations.
- Educate employees at every level to be wary of unsolicited calls.
- Compile a list of companies typically used by your business.
- Fraudsters will use real company names like Yellow Pages to make the invoices seem authentic. Inspect invoices thoroughly prior to making payment.
When we look at frauds committed in the business and service industries there is a lot of under-reporting. Perhaps this is due to people being of the mindset that they should have known better or seen the signs that it was too good to be true, so they absorb the cost instead of reporting it. Of the occurrences that are reported, it is sometimes difficult to differentiate as to which ones are criminal in nature or civil. If there is no overt indication that the occurrence is criminal, the individual is referred to Service Alberta CIU to review and possibly investigate.
If you've been a victim call the Edmonton Police Service immediately at 780-423-4567 or #377 from your mobile phone. If you're a victim of fraud, do not be afraid to come forward. You are not alone. We are here to help you.
To report a fraud, please contact the Canadian Anti-Fraud Centre online or at 1-888-495-8501.
If you have been the victim of fraud and you require support, please contact Crime and Trauma-Informed Support Services at 780-421-2217 or via email.