New client or fraud scammer?

An exceptional fraud case has recently been brought to my attention by a colleague.

A trading company from the electronics/IT sector got an inquiry from a prominent French enterprise. The request arrived via email and was processed by a sales employee. The number of orders was worth about 80.000 Euros.

Another sales employee checked the website that was listed in the Email and used the relevant service providers to review the company’s credit history. Results were very positive, so the order was completed and shipped to Great Britain, as discussed.

Shipment Done - Thank You!

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Order arrived according to plan – but the payment did not. After several reminders and unacknowledged emails to the French company, the company management started investigating. Apparently, the company had fallen victim to a scammer. Said scammer had perfectly copied the website of the existing French company and operated it on his own, very similar sounding domain. (.com domain)

The company complained to the police, but after just a few weeks they were notified by the public prosecution department that the perpetrator could not be determined.

What Has Been Overlooked in This Fraud Case?

A simple internet research regarding the company’s name would have shown, that there are several domains for said company, among others a domain with the domain suffix .fr, which is usually used for French websites. The real domain of the company in question uses the suffix .fr and a slightly different domain name.

Checking the website’s registration would have been helpful as well because the fake website was not registered to the French company but a private person with an address in Great Britain. Also, the domain was only registered eight months before the order. Checking the email address used for the registration would have shown that it was a free email account.

That differing shipping address should have set off the alarm bells as well. Checking the shipping address would have shown that the order was about to be shipped to a slightly dodgy part of London.

Results

Results are financial losses equivalent to 80.000 Euros and the realization that a now hired investigator would not stand much of a chance to find the perpetrator. The scam was too professionally organized. An investigation at the right time, meaning: when the order came in, could have avoided financial losses, primarily if the investigation had been conducted by an experienced investigator.

A background check of new clients and business partners is a matter of great importance and should be handled carefully. Selected cases should be handed over to a professional investigator. Specialized training for the salespeople is a possible alternative.

In this case, you can see the “missed” ROI = small investment for the investigation … big savings on “loss avoidance.”

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