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Preventing Fraud When Sourcing From Overseas

Read in 6 min. A con artist can be anywhere-anytime and he or she is just a click away from his "mark" a language used by con artists to identify a victim. Anonymity, ease of promotion and reach on global scale that technology offers are contributing to con artists rapid expansion.
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Tekle S.

A Business Trainer from
Brentwood, United States

Tekle is available for projects both virtually and in-person.
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As national boundaries become more permeable to trade and investments so is fraudulent activities. In the old days scammers used to meet face-to-face with people they want to prey. Welcome to globalization! Now, modern technology (digital world) has allowed con artistes to globalize and to become more sophisticated using e-mail, message board and chat rooms to effectively con individuals and businesses. A con artist can be anywhere-anytime and he or she is just a click away from his ‘mark’ - a language used by con artists to identify a victim.

Anonymity, ease of promotion and reach on global scale that technology offers are contributing to con artists rapid expansion.

The fast growing international fraud is not confined to any particular region, country or industry. The phenomenon is so prevalent and international fraud is behaving like a wild fire that cannot be contained. Because of increased scam activity sellers that have a good product to sell are becoming reluctant to go international and therefore, remain domestic and lose millions of dollars from global sales. While your company might have legal forces that can help go after con artists in your country the legal remedy outside of your country to catch and punish these fraudsters is almost non-existent.

There is no sure way to protect your company against con artists than to be educated on the different types of scams that keep constantly changing with technology. Here are the most common international scams that you should watch for:

Advance Fee Scam. Also known as Nigerian or West African scam is a type of fraud named after an article of the Nigerian penal code under which it is prosecuted.

This ‘the mother of all scams’ scheme typically starts with a letter from Nigeria or another country e-mailed and offers the recipient the ‘opportunity’ to share a percentage between 20% to 40% of millions of dollars that the author, a former government official or relative of high ranking wealthy government officer is trying to transfer illegal money out of Nigeria or another country. If the victim is interested then he will be asked to forward documents including bank account number, blank company letterhead, telephone and fax number and other documents to make it look real. The possible victim is then asked to deposit money into a bank account provided by the scammer to cover expenses and complete the process. The scammer uses the funds deposited in his account to commit other crimes.


Escrow Fraud. This involves a third party escrow service company to help facilitate the exchange of money and goods. The scammer advices the victim to use an escrow service website that the scammer created. The website resembles a legitimate escrow service company website. The victim sends the payment through the bogus website or the victim sends goods and waits for payment.


Letter of Credit Fraud. Letter of credit is always issued by the buyers’ bank (issuing bank) and is forwarded to the advising bank located in the sellers’ country to notify the seller. Scammers often produce identical documents that a bank produces and send the documents directly to the seller. The seller assumes that those are legitimate documents from a bank and ships and waits for payment by his bank that will never happen. Another common letter of credit scam is presentation of false shipping documents by the exporter to the advising bank to show that the goods were indeed shipped and payment have to be made, when in fact the goods were not shipped.


Phishing scam. A scammer attempts to extract sensitive information such as credit card number, password, drivers license or passport number that can be used to commit crimes using the victim’s identity. Most phishing scams start with an e-mail or instant message sent to the victim. The message asks the possible victim to update personal information in a web site created by the scammer that resembles an institution’s web site that the possible victim does business with. The victim’s personal information is then used to commit crime.


Counterfeit International Money Order and Cashers Check scam. A scammer agrees to buy goods with the arrangement that payment to be made using International Money Order or Cahiers Check. The money order or check that appears to be authentic with all its bells and whistles including magnetic routing codes and name of a legitimate bank is directly mailed to the seller and is often higher than the value of the transaction. The scammer suggests to the seller to keep portion and wire back immediately the rest into the scammer’s account. The seller approaches his bank to cash the counterfeit money order or cashiers check after sending the extra funds, only to be told that it is fake.


Click Fraud. Is also referred as pay per click advertising. Scammer will imitate a legitimate website. A user will click on an ad to purchase and all financial information is provided to the scammer through the website. The scammer uses these personal information to commit crime.


Eight ways to avoid fraudulent activities:

1. Education. Remember that there are several types of scams, learn what scammers are looking for. Watch out for new scams.

2. Investigate. Do thorough investigation yourself. Do not depend on message board answers, the same person who is trying to scam you might respond to your message with positive comments

3. Be patient. Do not make quick decisions that is what exactly scammers want you to do, to make fast irrational decision. Remember that every journey starts with a single step.

4. Use commonsense. Look for red-flags examples, high return, complex transactions, letters or messages that are not professionally written.

5. Do not be greedy. Do not let greed drive you to take unnecessary risk. Remember the saying - if it looks too good to be true, it probably is!?

6. Be skeptical. Question every aspect of transaction very carefully, it is good business.

7. Ask for references. Check with government agencies including trade agencies or chamber of commerce of the seller or buyer country, invest time to verify legitimacy of the company or individual.

8. Country of origin. The location of a scammer is irrelevant a scammers can be anywhere including in your community.


Use the following website to learn more about fraudulent activities.

Federal Bureau of Investigation (FBI)
Common Fraud Schemes
http://www.fbi.gov/majcases/fraud/fraudschemes.htm

Fraud Aid .com
Letter of Credit fraud: truth vs. scam
http://www.fraudaid.com/letter_of_credit_fraud.htm

U.S. Secret Service
PUBLIC AWARENESS ADVISORY REGARDING ‘419’ OR ‘ADVANCE FEE FRAUD’ SCHEMES
http://www.secretservice.gov/alert419.shtml

Looks Too Good To Be True
Types of Frauds
http://www.lookstoogoodtobetrue.com/

This Article is authored / contributed by ▸ Tekle S. who travels from Brentwood, United States. Tekle is available for Professional Training Work both Virtually and In-Person. ▸ Enquire Now.

Comments (2)
Your thoughts matter - more than you can imagine.

KAMUKA
We are sourcing for a fraud expert
KAMUKA from Uganda
masud
Dear sir, thank you for giving idea about the exitig fraudness iin internet depended export import age. masud
masud from United Kingdom

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