Keeping the Crooks at Bay: Tips to Avoid the Advance Fee Scam

The advance fee scam has become a major topic of conversation for commercial collectors as a team of crooks seem to be targeting the sector of the account receivables management industry. Collection experts are telling insideARM to get the word out. Lesson 1, if it looks too good to be true, it is.

Guest Blogger David Matten, owner of National One Credit Corp. in New York City, successfully fended off the crooks when they approached his firm. Matten offers some pointers to ensure your company isn’t the next victim.

HOW COLLECTION AGENCIES CAN AVOID BEING SCAMMED 

With the emergence of Voice over Internet Protocol (VoIP) technology that allows you to work from any country and change how your number reads on incoming caller ID’s as well as an increase in online scams, collection agencies have now become the target of sophisticated international scammers looking to gain control of your trust accounts. You may have heard this one before… “If you don’t receive the check by tomorrow, simply provide us with the wiring instructions for your trust account and we’ll wire it immediately.”  Don’t be surprised if you get a call from a merchant 2 or 3 weeks later stating your check bounced or your bookkeeper asks you why you purchased a new laptop in China.  The scammers simply took the account number you provided and included your routing code (which is public record if they know where you bank), and the only thing left to do is provide a starter check number such as 99999 on their check drafting software. You would only find out about it after there is a discrepancy in your trust account (and this could take weeks to catch).

1.    The first and most important is NEVER UNDER ANY CIRCUMSTANCES wire funds to a client prior to clearance regardless of the pressure being placed on you to do so (and try to avoid wiring altogether). You must make it clear that your policy is to only remit upon clearance and you should maintain internal controls that only release funds once they have cleared (in the case of foreign funds this could take months).  As most of us have existing relationship with banks, a portion of our funds are likely to be made available much sooner and the scammers know this and hope you remit even a small portion.

2.    If you receive an international claim make an attempt to call the client and confirm a working telephone number.  Even if it’s after hours you may get a voicemail at the business that confirms the entity exists and that’s a start.

3.    Open a separate wire trust account independent of your operating and trust account and then simply move the wired funds to your trust once received.  You thereby maintain a zero balance in your wire account at all times and there is nothing left for a scammer to debit or write checks off of.

4.    When dealing via email only – do your due diligence when the client emails you from public sources such as Yahoo, gmail, AOL, etc., as most legitimate companies have web sites and email addresses via their internal web hosting such as dmatten@national1credit.com. If you are getting a non-working number on the clients end (especially if it’s international) find out why that is.  If client gives you excuses this should be cause for concern.

5.    If you receive an email placement from a questionable entity then you should put everything after the @ symbol into your web browser and check out their web site.  You may find you are dealing with nothing more than a free internet email provider.

6.    Every check received over $10,000 should be verified – PERIOD.  It takes 3-5 minutes to accomplish and saves you big time if the check is counterfeit.  Simply do a quick online search for the paying bank and fax them a copy of the check.  Most banks will not verify funds but will verify if a check is in fact genuine.

7.    Periodically check the endorsement on the back of the checks that you send out after your bank returns them and see if the signing party in fact matches the client who placed the claim.  Be wary of “pay to the order of John Doe” or any individual for that matter per “Your company name”.  Ask yourself … why is my business check being cashed by an individual?

8.    If the claim doesn’t pass the smell test, that’s probably because its bogus and no matter how excited you are thinking you just had a great month and you don’t want to lose this client so “lets just remit a portion early so we can get more claims” NEVER let your emotions get the better of you as you will only end up battling the bank for your funds back and you will likely lose.

9.    And finally … always question debtor payments in cash.  A quick scenario … a client places a $175,000 claim (and there’s more where that came from you are told) but wants a major discount in rate as its more of an accounting issue than recovery as “debtor pays in frequent small payments and its only 2 weeks past due – this has become too difficult to manage”.  You open the claim at 10% or less and debtor starts walking in with cash a few weeks later which you apply to the open balance.  You then remit to client via wire and this is the easiest collection you have ever had.  What you may have failed to realize is that you just assisted a money launderer at the inexpensive price of 10% (or less) of all cash received.  What a bargain! That is until the feds call you and then you can re-read this article b/c I will personally send it to you at the courthouse.  If it sounds too good to be true, it probably is too good to be true.  So ask yourself “Why Me?” when something really spectacular crosses your desk and looks to easy to be legitimate.