These aren’t your garden variety scams involving Nigerians, Phishing
and Russian Brides. No, we’re talking about under-the-radar ways in
which IT Resellers are getting burned by unscrupulous buyers. These are
professional scam techniques that are pulled off at various levels of
sophistication.
1) They Claim to work for a Large Corporation
- Taking advantage of a company’s weakness to trust a big name.
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It’s customary for corporate clients to require payment terms, anywhere
from seven to thirty days to pay their invoice after shipment. Usually
credit checks are run before terms are granted, but if a company is
large enough (and if the order seems urgent enough), some companies will
ship first and ask questions later.
When collection is attempted, phone numbers are disconnected and the
corporation informs you that they don’t have a branch in Apartment 306,
Brainerd, MN. At this point, all you can do is file a report and watch
the internet to see if the stolen goods get posted at auction.
2) Certified Check Upfront- Safer than a personal check, but not by much.
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This seems like a great solution when you’re not quite sure that you can
trust a client to pay. They send a certified check or money order and
it looks just fine, so you ship the equipment. A day or two later, the
bank calls to tell you the check is a fake and the funds can’t be drawn
from the made-up bank or bank account. The equipment was shipped
overnight and will never be seen again.
3) Credit Card Chargebacks – The reseller is guilty until proven innocent.
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Buying with a fake credit card is not underrated, but the
ability to request a chargeback is a lesser known way to pilfer an
honest reseller. A client can claim that what they received was not
correct and ask the credit card company to withhold disbursement until
resolution.
We’ve had unscrupulous buyers claim that what they received was used
hardware instead of new, when we had blatantly quoted them used
equipment all along and had written discussions regarding that issue.
They requested the chargeback on the equipment knowing that it wasn’t
worth the legal fees, time and effort for us to do anything but settle.
It is also a technique used to buy time before the scammer disappears.
4) Buy, Buy, Buy, Bankrupt
– The most accepted and painful technique on the list.
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An IT Buyer knows their company is headed for Chapter Whatever,
yet they’re instructed to buy as much infrastructure as possible before
going bankrupt. The hardest hit are usually the smaller vendors that
don’t have first right of payment agreements with the now-bankrupt
corporation. The big vendors get debts paid out first while the small
vendors, that can handle the blow the least, get peanuts back. The
bankrupt corporation might use the acquired hardware to get through
their rough spot and emerge healthy some years later.
Tomorrow: I’ll publish seven ways in which IT Resellers can spot these scams.
Note: I have gone into very limited detail
here on the levels of sophistication involved. I’ve seen all of these
and more in action. If you’re a concerned reseller and would like more
information, please feel free to contact me (corey at vibrant dot com)
or call 888-443-8606.