Fraudulent Purchase Orders on the rise during COVID-19 crisis
Companies in manufacturing and distribution sectors are reporting a spike in fraudulent purchase orders in the wake of the COVID-19 crisis. A number of these orders have been reported to be in excess of $200,000 and have been mistakenly processed by suppliers without conducting proper due diligence.
Elements of the fraudulent purchase orders have included
- Unsolicited 6-figure orders from first time buyers from apparent big companies, government entities, or universities.
- Demands 100% Net terms with no down payment.
- Ship-to locations that have no relation to the supposed buyer.
- Contact telephone numbers that are unverified cell phones.
- Use of Email and website domain addresses in a phishing-like manner (i.e. tcd-inc.com instead of tcd.com).
- Use of real corporate logos in their phishing emails.
- Fake LinkedIn profiles of the purchaser with few contacts and no pictures.
- Perpetrators obtained and used personal information, including names and contact information of staff, to add credibility and substantiate their order.
- Perpetrators consistently attempt to complete the transaction without engaging in a phone call.
Recommended course of action
- Establish approval process protocols and policies in your Sales Departments for larger orders.
- Involve your Credit Departments to assist with validating larger orders from first–time buyers.
- Speak to the company’s buyer before you just fulfilling orders, verifying that they work for the company and details of the ordered product.
Data collected is consistent with fraudulent activity experienced during previous crisis and recessions, such as the 2008 crash. It is highly recommended that all organizations evaluate and revise practices to deter fraud. It should be noted that Credit Departments, internal or otherwise, cannot collect for product shipped to a bogus company.