Most common forms of fraud
There are three forms of fraud that are by far the most common:
Fraud by a ghost company
First, the fraudster who orders a lot of goods in a short time and has everything delivered to a rented warehouse or general marketplace. The goods are quickly collected and resold. The fraudster disappears into the sunset, leaving behind an empty business without much value. This fraudster has an existing limited company and often this person knows that credit insurers also provide cover on this limited company. If you have obtained a credit limit on the company (fraudster), you will usually get compensation from the credit insurer. After all, you actually did business with the BV that subsequently turned out to be involved in a fraud.
Fraud on behalf of a reputable company
Then there is the fraudster who pretends to be an employee of an existing and reliable company. He orders the goods from you and orders them to be delivered to a specific address. He quickly removes the goods there. The company he supposedly works for has not ordered or received anything, but is sent the invoices. If you did obtain a credit limit on the company, you will still basically not get compensation for the loss from the credit insurer. You have been misled and therefore have not actually done business with the company on which you obtained a credit limit.
Fraud through phishing
Then there is the fraudster who sends phishing emails. Phishing is a form of cybercrime or internet fraud. You receive fake emails that try to lure you to a fake website. The emails appear to come from well-known companies, such as your insurer, bank or a customer. With the phishing emails, the fraudsters want to steal data from you such as login details, passwords or credit card details. Or they send you phantom invoices. In doing so, they can cause serious damage to your business.
How to recognise fraud
You can recognise fraud in several ways:
- You cannot find your new client's professional website;
- You only have a mobile phone number;
- Your client did not negotiate price or terms. A new client generally does;
- The correspondence you receive contains many grammatical or spelling errors;
- The new customer does not use a business e-mail address, but uses a gmail, hotmail or similar e-mail address;
- The stationery does not look professional;
- The office address is a P.O. Box or a business building;
- There is a remarkably short period between the first contact moment and delivery;
- The new customer changes the delivery address at the last minute and wants to collect the goods quickly;
- The client would like to provide references and other material to convince you;
- You cannot reach the client or only with difficulty;
- The VAT number is no longer valid (you can check this via http://ec.europa.eu/taxation_customs/vies/;
- The client is not familiar with your industry.
5 tips to prevent fraud
With these tips, you can try to prevent fraud:
1. Let a new customer pay in advance
If it is an assignment or order of any size, it is important to check your potential customer's payment behaviour, creditworthiness and financial status beforehand. It is also a good idea to check whether your contact is authorised to sign. You can request this information from your credit insurer and the Chamber of Commerce. Does this reveal that your new customer has a poor payment record? Then ask if he will pay all or part of the amount in advance.
2. Listen to others
The best tips come from suppliers. They often have the fingerspitzengefühl that a debtor has bad intentions.
3. Be alert to suspicious behaviour
Do some research on your new customer. You may be dealing with a fraudster if someone does not negotiate the price properly or not at all, does not have the right facilities (think refrigeration equipment) or is totally unfamiliar with the industry. Also be alert to different mobile numbers, a gmail or hotmail account, strange stationery or delivery addresses that differ from the main address.
4. Secure your accounts
Use two-step verification on all your accounts and set up your spam filter properly. Make sure you only give your details online on secure websites. Make sure you know how to surf the internet safely.
5. Check, check, double-check
Visit the website and check the grammar and spelling of correspondence: it should be in line with what you would expect from a professional organisation. Check the delivery address in Google Street View, whether it is a logical delivery address. Also instruct your drivers to unload goods only at the agreed destination and remind them to report suspicious situations immediately.
Do you receive compensation on your credit insurance?
Whether you are insured against scams depends on the type of fraud. If you have been scammed by a phantom company, but have obtained a credit limit on this company, you will get compensation in most cases. For scams by a fraudster doing business on behalf of a trustworthy company, you will usually not get compensation. For phishing, it depends on your cyber or fraud insurance. As a rule, the credit insurer will not pay out because of the 'real' buyer disputing the invoice.
In doubt? Ask Xolv
If you have any doubts about a debtor's morality, contact us. Thanks to our years of experience, we often recognise deviant behaviour at an early stage. Moreover, we can consult multiple sources of information to assess whether the company you want to do business with is in good faith.
