Not the Same as Cash
Is that a counterfeit check?
The Problem is increasing. Can you spot the Clues?
All you have to do to know how to create fraudulent checks these days is to turn on the nightly news, or pick up a current news magazine or newspaper. As a result of this training information, and the ease and availability of methods and material, we are experiencing more check fraud than ever before in the history of banking.
How do we protect ourselves against this onslaught of fraudulent activity?
There used to be a joke about having a magnifying glass at every bank teller's station. In today's environment, a good, high-strength magnifying glass is a good investment for your business.
Can you tell a counterfeit by its “feel’?
Your hands and fingers may be your best defense in identifying counterfeit currency as well as counterfeit checks. Take a brand new piece of currency and lay it on a hard surface. Take your fingernail and strum it on the clothing of the portrait. Feel the "bzzzzz"? That's because there are several layers of ink on the top of the paper. You can feel it with the tip of your index finger on the words "This note is legal tender…"
If a check has been cut by an imprinting machine, there will be a series of dots, creating a uniform indentation of the surface of the paper. There will be uniform "blisters" on the reverse. See if they match. Information created by an imprinting machine may be altered on the document's face by using a fine-line pen. This alteration is accomplished by carefully drawing lines or dots, simulating the pattern created by the imprinting machine. The reverse of the document will be blistered in the altered area. This technique is known as "jail-house art".
OFFICE SUPPLY SCAMS
Your organization could be a victim of an office supply scam … IF you don’t have adequate purchasing controls. You can protect yourself by learning to recognize the scams and understanding your rights. The typical office supply scam involves goods or services that you routinely order: copier paper, toner and maintenance supplies, equipment maintenance contracts, or classified advertising. When fraudulent telemarketers call, they often lie to get you to pay for items you didn’t order, or to get you to pay more than you agreed to. How? The caller may falsely claim to be your "regular supplier" or to tell you that the offer is "special" or "good for a limited time only."
Office supply scam artists generally use three ways to take your money — the Phony-invoice , the Pretender , andthe Gift-Horse .
A twist on this approach may have the fraudulent seller timing a phony invoice to match your purchase of legitimate services from another vendor. For example, the seller sends you a bill for unordered classified advertising soon after your ad runs in a legitimate publication. The scam operator hopes you’ll be confused and pay his bill instead of, or in addition to, the o ne from the legitimate company.
The Pretender Scam
In one variation on this scam, the caller misrepresents the quality, quantity, type, price, or brand name. For example, the ribbons for your IBM typewriters may not be IBM brand ribbons, or the toner for your Xerox copier may not be Xerox brand toner. Some scam artists try to duplicate brand name packaging; others sell half a carton of merchandise at the full-carton price. Similarly, sellers of Yellow Pages advertising may actually represent fly-by-night outfits that distribute few, if any, telephone directories.
In another twist, the caller uses high pressure tactics to rush your purchase decision and dodge questions about price, quantity and brand names. The seller may falsely claim that prices are going up soon, someone was forced out of business, a warehouse is overstocked, or a limited inventory of government surplus is available. Or that a computer glitch delayed notification of a price increase, but, as a courtesy, an order has been reserved for you at the "regular" or "old" price.
Or, the seller may misrepresent the purpose of the call, saying that he’s calling to send you a promotional item such as a cordless screwdriver, free samples, or a catalog so you’ll "think of him next time you order." Or the seller may claim that he’s conducting a survey of office equipment or updating company records, leading you to believe that he’s the regular or previous supplier. Before hanging up, the caller may mention — in passing — actual merchandise. "I’ll send that screwdriver to you right away ... and while I’m at it, I’ll throw in a few deodorant blocks." Soon, a shipment arrives, followed by the bill.
The Gift-Horse Scam
Protect Your Organization
Disguised as Invoices
Don't be victimized by con artists who try to get your company to order goods or services by mailing you solicitations designed to look like invoices. The unscrupulous individuals who mail these know that some unsuspecting managers and employees will be fooled by their appearance and will automatically remit payment, thinking the company had placed an order.
Some solicitations disguise their true nature. Others identify themselves as solicitations, but only in the "fine print". In either case, protect your company's assets by withholding payment until you have verified whether your company actually ordered and received the goods or services reflected on the document. If not, do not pay.
Con artists often make large mailings of illegal solicitations. Even if you are not fooled, you can help the Postal Inspection Service learn of such mailings by reporting the receipt of non-conforming solicitations to your local postmaster or the nearest Postal Inspector. The Postal Inspection Service may be able to prevent other business people from being victimized.
BEWARE OF “OVERPAYMENT” SCAMS
The CEO was overjoyed; her company had generated its biggest sale of the year, and a cashier's check had arrived to cover the payment. Then the client called; he needed to cancel part of his order. Could he get a partial refund? The grateful entrepreneur complied, succumbing to a kind of fraud running rampant.
Overpayment scams use startlingly authentic-looking phony checks to defraud small-business owners distracted by seemingly large orders.
How does the overpayment scam work?
Typically, a company that's selling or marketing itself on-line gets an order accompanied by an "official bank check" or a cashier's check. Then the client contacts the company to say it needs to reduce its order and asks for a refund of part of the money. Typically, the client has sent a very large check -- maybe $50,000 or $70,000 -- and ask for $4,000 to $7,000 back. So, the business owner is willing to refund such a small portion in order to keep the client happy. It takes 10 to 15 days to find out that the original check is bad, by which time the business is out the money it sent as a "refund."
Who is falling victim to this scheme?
Hotels have been victims when some person or organization books a large block of rooms and meeting space for a conference, sends in a check to cover the reservation, and then says it has had some cancellations and need to refund some portion of the money.
The scam has also victimized people like caterers, event planners, and companies selling high-end products like jewelry, sports equipment, vehicles, and things like that. The common thread seems to be businesses that advertise themselves on the Internet, either through business directories or with their own Web sites and on-line marketing materials.
Why are those scammed perpetrated primarily by on-line companies?
It's wonderful when companies can open up their businesses to the global marketplace, but with that global marketplace come global scam opportunities. While small companies are encouraged to market using the Internet, but should be concerned that it opens up the opportunity to be surfed and scammed.
Can't bad checks be identified quickly through national financial databases?
Personal checks are returned right away, but these scammers use what looks like a cashier's check, and those don't move through the electronic check-verification process quickly. It takes up to two weeks, by which time the victim has already sent the refund and sometimes even spent some of the money.
Small companies typically don't have in-house credit managers to check out large payments, and the owner figures if the money has arrived in advance, everything must be O.K. These checks also tend to be for very large amounts, so the small-business owner is excited to make such a big sale and often doesn't question it too closely.
What happens when the check is returned as a phony?
Well, the refund that has been requested has typically already cleared the victim's bank account. Sometimes, the merchandise has been drop-shipped to a third-party destination, where it is then fenced. And in the worst-case scenario, the victimized business has already spent some of the money it thought had come in.
Banks hold business owners liable for returned checks, plus service fees and return charges. So, all of this becomes a loss. For very small companies, it can amount to a catastrophic loss.
If businesses report these crimes, do they have a chance of getting their money back?
It is most unlikely that a small business will recover any of the funds. It is so hard to trace the check back to the source; it's virtually impossible. That's why it's so critical to warn people about this problem.
How can entrepreneurs avoid overpayment scams?
Beware of any significantly large or unusual order, especially if it comes from a new client and you're convinced it's the best sale you've had all year. That's the time when you could get burned. Take any check you're not familiar with directly to your banker and have it verify that the check is authentic before you send any refunds or release any merchandise.
Do these checks typically look authentic?
Absolutely! You can go to the Internet and without any identification or bank-account information, you can order checks or create checks with any kind of routing and order numbers on them. Law-enforcement agencies are trying to shut down that possibility, but they haven't been successful yet. The fact is, technology and Web services are readily available to criminal elements, and they can create a better-looking check than the one that comes from your bank stock.
Bogus yellow pages ads
Unscrupulous promoters are soliciting advertising for on-line, alternative or non-existent business directories. Although these directories appear to be legitimate Yellow Pages publications, they are not distributed to the public, posted on the web, or promoted as promised. As a result, the directories - if they exist at all - offer no benefits to businesses that pay to advertise in them.
The solicitation to buy ad space may be designed to look like an invoice and bear the "walking fingers" logo and the Yellow Pages name.Neither the name nor the logo is protected by federal copyright or trademark registration. That's how fraudulent promoters are able to lead businesses to believe they are affiliated with local telephone directories.
The $10 billion Yellow Pages industry has launched a coast-to-coast program to counter pervasive, nationwide fraud that plays upon the legitimacy of the second-most referenced book after the Bible. According to one survey, nearly one-third of owners said their businesses have received bills for Yellow Pages advertising they never ordered. The Yellow Pages Publishers Association estimates more than$550 million each year is being collected by con artists soliciting Yellow Pages advertisers with bogus invoices for print and on-line directories.
A fraudulent seller may send you a bill for unordered classified advertising soon after your ad runs in a legitimate publication hoping you will be confused and pay his bill instead of, or in addition to, the one from the legitimate company.
The U.S. Postal Service requires solicitations that look like invoices, bills or account statements to carry the following notice:
“THIS IS NOT A BILL. THIS IS A SOLICITATION. YOU ARE UNDER NO OBLIGATION TO PAY THE AMOUNT STATED ABOVE UNLESS YOU ACCEPT THIS OFFER”.
However, the above notice may appear in the background as a faint “watermark”. Before you buy advertising space through a mail solicitation or pay an "invoice," take the following steps:
©2013 First State Bank of Arcadia. All rights reserved. Website powered by ProfitStars.