FACT: Fraud Awareness for Commercial Targets

Fraud The Fraud Awareness for Commercial Targets (FACT) campaign is an outreach and education initiative of the Competition Bureau that provides businesses and not-for-profit organizations with the facts necessary to avoid becoming victims of fraud, which costs them millions of dollars annually.

Here are the "Facts" on Fraud

Read About Scam Techniques



The business looks and sounds like any professional vendor you've ever dealt with…but before you know it, you're trapped. Office supplies you never ordered are delivered, goods are paid for but never received, and their customer service staff is not authorized to cancel orders that you're certain you never placed. What's more, collections agents from these supposed vendors get nasty…suspiciously so. Remember: A reputable vendor cares enough about your business to treat you with respect, but a criminal is only interested in getting your money today, and closing up shop tomorrow. Click below to get some first-hand accounts of how these scams operate.

Types of Business Scams

Office Supply Scams

Typical products used in this type of scam include paper, ink toner, first aid kits, light bulbs, paper rolls for debit and credit machines and various commonly-used office supplies.

This scam involves one or more unsolicited phone calls to a targeted business. The goal of the first call is to gather information on your company, such as your name, names of your colleagues, a corporate mailing address or type of office equipment used. A second or third phone call is placed to a colleague and the caller uses the acquired information to imply an existing business relationship. Thus, your colleague is misled and then is drawn into agreeing to accept shipment of supplies that were never ordered in the first place (this is referred to as an "assumed sale" scam).

When the supplies are delivered, you realize that they are not what you thought you were getting–they are of poor quality and cost as much as 10 times above the market rate. If you try to send the box back, you find that their mailing address does not accept deliveries.

When you refuse to pay the invoice, you receive countless aggressive collections calls threatening to report you to credit agencies and local business associations to damage your reputation. If you do pay, the problem can get worse as the scammers continue attempts to get even more money from you.

Directory Scams

Businesses and not-for-profit organizations are also targeted in directory scams. Organizations are asked if they want to either advertise within or purchase an online, CD-ROM or print directory specifically designed for your sector or industry. You agree to buy it. Either it does not exist, or it contains no reliable information whatsoever, or there is no real value to the advertising.

Sometimes a telemarketer will contact you to ask you if you want to renew your two-year subscription to their directory when in fact, your office never had such an account. Many people are fooled into paying for an invoice without checking their records to confirm if they placed a previous order, or ensuring that the directory exists in the first place, and that the business is one they have hired.

These scams prey on the fact that all organizations want to promote themselves, so a pitch featuring a way to increase people's awareness about your operations will likely grab your attention. If you do receive a directory, it may feature some real but mostly bogus information. However, if you don't look too closely, and if you don't use it, you may never come to realize that it's a scam.

Phoney Invoice Scam

This scam follows the "assumed sale" tactic described above by simply sending an invoice or bill requesting payment to an unsuspecting target.

In this scam, you receive an invoice or bill requesting payment. The phoney invoice may arrive with a product. The invoice appears credible, with a professional layout and on high-quality paper. You are misled into believing this invoice requires payment. Over time, these fraudulent operations appear on your vendor lists, which means that the next invoice is more likely to be paid without question.

This scam often impersonates a legitimate business, and at a quick glance, the paper you receive can often be mistaken for a bill for real charges. Invoice scams typically are for low amounts that are more likely to go undetected, but small quarterly or monthly losses add up over time.

Common Tactics

Scams targeting businesses and not-for-profit organizations often work because the victims were under the impression they were dealing with a professional, credible and reputable business.

Here are samples of techniques often used by fraudsters to con you:

  • Reciprocity: "We'll give you something, so you give us something in return." This means they may offer a prize, a special price, or other privileges to get your agreement to send money or to confirm an order.
  • Foot in the Door: Sometimes fraudsters will get you to agree to some small purchase, and then surprise you with larger commitments later. For example, you agree to accept a free box of paper, but then find out that in doing so, you have agreed to a monthly supply of paper.
  • Pitch a Better Deal: Some scams may offer something really expensive and out of a person's price range. Expecting you to balk, you are offered something cheaper, which now looks more reasonable. You may mistakenly feel like you got a good deal but later realize that you have been defrauded.
  • Initial Agreement Pressure: Early in the pitch, you are asked a question like: "Do you like to save money?" Later in the transaction, you are made to stick to your word by committing to a purchase by reminding you that: "You said you wanted to save money."
  • Peer Pressure: "Four out of five of your neighbours/competitors have already bought it. Can't you afford to? Don't you think your neighbours are smart people?" This tactic is effective because it gives the impression that this company has a good reputation, is well known and is trusted by your peers.
  • Flattery: Many scam artists are charming and personable and give compliments as a way of disarming you and getting you to fall for the con. "Just for you…because you're in an exclusive group…because you have a beautiful voice…because you are a high achiever…because you have a good credit rating…We seek the top 10% of businesses in each industry for membership in the directory."
  • Authority: Borrowing credibility from an outside source can be effective. Claims such as: "We're registered with the government as the official supplier of…" or "You are required by law to buy this…" or "We're owned and operated by MBA graduates with over 12 years experience in the industry." are highly persuasive and disarming.
  • Scarcity: Here the scam artist makes you feel that you will miss out if you don't say yes immediately. "Act now, because we only have a few left. The offer ends tomorrow."
  • Urgency: This is another pressure tactic: "I'm glad I caught you today. Prices go up next month."
  • Exclusivity: Everyone loves to feel that they are getting special treatment or have access to privileged information. Be weary of such ploys. "Don't tell anyone else I'm making you this offer."
  • Altercasting: As a means of persuasion, this technique places you in a highly-desirable and respected social role by telling you: "As a critical member of your organization, you should know…" or "Are you the manager? Then you should have the authority to approve this offer now…"
  • Excitement / Emotional Involvement: Con artists are skilled at getting you excited about the pitch: "You'd be crazy not to sign up today. I wish I were you and could afford to do this myself."
  • Give a Little Bad News to Appear Honest: For example, "There's been a problem in shipping…we need to verify the order, confirm delivery date." Another example: "Our manufacturer is folding. This is your final delivery of…"
  • Creative Name Use: They'll give a company name that sounds large, national, international…and they will also give the first or last name of the caller, despite probably being an alias.
  • Paperwork and Professionalism: When you say "I'm not sure I ordered it", you are told, "My records show that I called you on (date) / at (time) and confirmed the amount. I'll include my personal business card in case you have a problem with the order."

Key Phrases Used

Have you heard the following? Review this list and think about the ways these phrases might be used to fool you.

  • "We are calling about a pre-authorized purchase."
  • "We've had some delays in our shipping department and need to confirm your order."
  • "Unfortunately, we're calling to close your account with us."
  • "Do you require a purchase order number or can I send it directly to you?"
  • "You'll be receiving a verification call from our quality control department."
  • "We are calling to confirm shipping details/account information."
  • "We'll be recording our call for quality control purposes."
  • "I'm not authorized to cancel your order/close your account."
  • "You have a two-year listing with us."
  • "May I ask what type of printing equipment you use?"
  • "We seem to have overpaid you."
  • "I am calling to approve your advertising copy for our directory."
  • "I would then have to re-invoice you."
  • "There's no way I can retract your order."
  • "I was speaking with you previously."
  • "If you have any questions, you should ask me now. Our shipping department won't be able to answer them when they call to confirm delivery details."

Read Examples of Phoney Telemarketing Calls

What sounds like a routine administrative phone call to your office can really be a carefully designed script to hook you into accepting services and products you never ordered, or getting further information to be used to draw you into a future scam. Ask yourself: "How would I respond?"

Example One: The Fraudster Successfully Scams!

Mike has allowed a fraudulent shipment to come into the company, because he never questioned what was supposedly ordered by a former employee.

Receptionist: Hello, Global Petro 10 Corporation.

Telemarketer: Good morning, may I speak with Brad?

Receptionist: I'm sorry, he's no longer with the company.

Telemarketer: Oh, I'm sorry. I need to confirm delivery of a pre-authorized shipment that he placed. Could you please tell me who has replaced him, or who looks after your office equipment?

Receptionist: Sure, that would be Mike Sanderson. Would you like me to put you through?

Telemarketer: Yes, please.

Mike: Global, Mike Sanderson speaking.

Telemarketer: Hello, Mike, this is Claire from Canada 1st Rate Office Services. How are you doing today?

Mike: Fine thanks.

Telemarketer: Mike, this is just a quick call. I was speaking with Brad a few weeks ago about a shipment of paper for your 5570 Printer/Copier and he had ordered a case to be shipped by March 3. Unfortunately, we've had some shipping problems and there will be a delay, so I just wanted to let you know.

Mike: Oh…okay…So what's the new date?

Telemarketer: Once I confirm your current information, we can courier them today, so they can be at your office by tomorrow at 10:00 a.m. Our shipping and quality control department will be calling you to confirm delivery information in a few minutes.

Mike: Okay.

Telemarketer: Okay, now the invoice is $149.00 plus shipping and GST. So now, since Brad has left the company, do I need a PO from you, or shall we just send the invoice to your attention?

Mike: My attention is fine.

Telemarketer: And you last name is "S-A-N-D-E-R-S-O-N?"

Mike: That's it.

Telemarketer: Thank you. You'll be hearing from our shipping department in a few minutes. Thanks for your time.

Mike: Okay — thanks!

Mike hangs up.

Following this initial call, the shipping department calls, confirms the address and invoice.

Receptionist: Good morning, Global Petro 10 Corporation.

Shipper: Good morning, may I please speak to Mike Sanderson?

Receptionist: One moment please.

Mike: Global, Mike Sanderson speaking.

Shipper: Hello Mr. Sanderson, this is Joe from Canada 1st Rate Office Services. You were just speaking with Claire from our Customer Service Department about your paper shipment?

Mike: Yes, I was.

Shipper: Okay, I'm just calling to arrange new shipment details. So you're aware, this call may be recorded for quality control purposes.

Mike: Okay.

Shipper: Are you still at Suite 300, 334 Centre Street?

Mike: Yes.

Shipper: So we should have your shipment out to you by courier for 10:00 a.m. tomorrow, is that fine?

Mike: Yes.

Shipper: Thank you very much. Have a nice day.

Mike: Thanks, bye.


Example Two: The Fraudster Gets Shut Down on the Call!

Here, the Receptionist cautiously warns the employee before he gets the call, and he gets a heads-up. Then he handles the call correctly.

Receptionist: Hello, Global Petro 10 Corporation.

Telemarketer: Good Morning, may I speak with Brad?

Receptionist: I'm sorry; he's no longer with the company.

Telemarketer: Oh, I'm sorry. Well, I need to confirm delivery of a pre-authorized shipment that he placed. Could you please tell me who has replaced him, or who it is that looks after your office equipment?

Receptionist: One moment.

The Receptionist places the Telemarketer on hold and calls Mike Sanderson, the new employee who has replaced Brad.

Mike: Hello, Mike Sanderson.

Receptionist: Mike, there's someone on the line calling about office supplies, asking for Brad. They're asking about some "pre-authorized" shipment. I'm thinking it could be one of those scams. Just to give you a heads-up.

Mike: Thanks. Well, put it through, and I'll figure it out.

The Receptionist hangs up with Mike and gets back to the Telemarketer.

Receptionist: Ok, that would be Mike Sanderson. Would you like me to put you through?

Telemarketer: Yes, please.

Mike: Global, Mike Sanderson speaking.

Telemarketer: Hello, Mike, this is Claire from Canada 1st Rate Office Services. How are you doing today?

Mike: Fine thanks.

Telemarketer: Mike, this is just a quick call. I was speaking with Brad Smithers a few weeks ago about a pre-authorized shipment of paper for your 5570 Printer/Copier and he requested a delivery date of March 3. Unfortunately, we've had some shipping problems and there will be a delay, so I just wanted to let you know and confirm your shipping details.

Mike: Well, I'll need to see a copy of the order Brad signed before confirming any shipment.

Telemarketer: Well, I can put in a request to fax you that document right away, but I do have a call record stating he ordered the shipment ordered a case of 48 paper kerfs for your 5570 to be delivered by March 3 for a special one-time price of $149. We're just looking for a basic confirmation of shipping details.

Mike: Again, I need to see the document Brad signed before confirming any shipment.

Telemarketer: Okay, I'm sure I can get you that documentation, but this shipment is already on its way so I just need to know to whose attention it must go.

Mike: Regardless, I will not accept shipments to my attention unless I ordered them. Again, I need to see the documentation first, we do not agree to purchases over the phone.

Telemarketer: Well, once we track down the proper documents, we can certainly send them through. However, if you do not accept the shipment, there will be restocking and return shipping charges amounting to uhhhh…$108.50+GST…so with that being worth $149.00 at this special price, it does make more sense simply to accept the shipment.

Mike: Look Miss, you cannot charge us fees for something we never ordered. We do not pay invoices like that. And if you persist, we will report your company to the Competition Bureau.

Telemarketer: I'm sorry you feel that way sir. Have a nice day.

Mike: Goodbye.

Mike contacts the Competition Bureau to report the suspicious call.

What Makes Your Organization Vulnerable

Your organization has many strengths, but your weaknesses could be costing you money. Are you vulnerable to fraud? Take a look at the following list:

  • You believe that this doesn't affect you. In truth, businesses, charities and not-for-profit organizations are losing millions each year to scams that are specifically designed to con them. Many organizations aren't even aware that they have fallen victim to fraud.
  • You are busy and don't have much time to get more information about fraud.
  • You don't have set procedures in place to authorize purchases, pay invoices and review expenditures.
  • You are distracted when you pay invoices or agree to purchases over the phone. Phoney invoices and bogus phone pitches escape your notice and cost you money. Many of these schemes are designed to fly under the radar.
  • You don't have time to take repeated calls from phoney "collections agents" looking for payment for a product you never ordered in the first place. To resolve the matter, you pay the bill just to be done with the matter.
  • You experience regular staffing changes. If your organization has high turnover, part-time or volunteer staff members, you may be at a higher risk of being scammed. Referring to other colleagues is a popular tactic to gain your trust. For example, a fraudulent telemarketer might tell you that she needs to confirm a shipping address because your colleague purchased some supplies from her company, when in reality that conversation never took place. Your colleague might not be at work that day or maybe he left the organization months ago, which makes it difficult for you to confirm if the order is legitimate. You provide the address to be helpful but end up receiving a shipment of office supplies that could cost 10 times the going market rate.
  • You recognize the name of the company because you have paid money for this directory, this subscription or this delivery before. If your organization has purchased something from a fraudster, you might not properly review additional transactions if the fraudulent company name now appears on your vendor list.
  • You don't report it because you're embarrassed or ashamed, you don't know who to call or what to do and don't believe that any good will come of it. In fact, it is estimated that 95% of those who fall victim to scams do not report it. Law enforcement agencies, including the Competition Bureau, depend on you coming forward to report scams to help take fraudsters off the streets.

See a Phoney Invoice

Your accounts payable staff sort through the mail, check the invoices, and for the most part, just make sure things get paid on time. But what if a fake invoice came in the door…in other words, what if you'd been billed by a stranger for goods you never ordered or haven't received? And what's worse, what if the scamming company shows your name as the authorized person on the invoice? Take a look at this fake invoice, and ask yourself whether you or your staff would question them.

Could you spot this fake?

Phoney Invoice

Invoice (PDF; 1.9 MB; 2 Pages)

The logo is the same as the real "walking fingers" logo, but it is going in the opposite direction…also the company name is slightly different. Intentionally deceptive.

And so what? It's not a big amount right? Well, the first one might not be. But they will add up over time. Your staff might not worry about it because of the small amount and pay the bill. The fraudulent vendors are then on your vendor lists. That means the next invoice is more likely to be paid without question.

What's more, your organization is now on a "sucker list" and your business information could be shared with other fraudsters, who will target you in future schemes.

Background:

Four individuals were convicted in April 2004 as a result of their involvement in sending out mail appearing to be bills or invoices from Bell Canada or Yellow Pages directories. In fact, they were solicitations to have the recipients' business details appear in Internet-based directories operating under the names Yellow Business Pages.com and Yellow Business Directory.com.

Between May and December 2000, these individuals sent mail to an estimated 900,000 business and non-profit organizations in Canada. The Competition Bureau received more than 4,400 complaints about the phoney invoices, which asked victims to send amounts of either $25.52 or $37.40 to a post office box in Toronto. This scheme generated over $1 million.

Information on recent cases pursued by the Bureau are available under the "Latest Announcements" section on the right hand menu of this page

Spot Phoney Emails


Most people are familiar enough with spam that they treat most incoming emails and various websites with some degree of suspicion.

But take a look at these examples.

To: "undisclosed recipient"
Date: January 22, 2012
Re: Special offer — Act now!!!

Dear Ms. Quick,

Account number: 07-0004623

What if I told you that you can get 35% off toner? Take advantage now of our special offer!

You are selected to receive this special offer.

Download our order form and remit it asap by email to ensure rapid delivery. Please note: you will need to provide us with your name, shipping address, and credit card number (with expiry date) and we will send you your toner.

Order now! Supplies are limited.

Yours truly,

Edward Mitchum
Business Solution Depot

Is it legitimate? Be careful because there are signs that suggest it is a scam:

  • They want your coordinates and credit card number, but what are they promising in return? There are more details here about what you need to provide than about what they are providing you.
  • There are few details here on what product is being offered and whether or not this company even offers toner made for your office equipment.
  • The toner is being offered at a rebate, but what is the price? A 35% reduction sounds like a good deal, but 35% off what amount? Be sure to find out before you order.
  • Many scams give a very professional appearance and are well presented. This, however, does not mean that all scams are slick. The spelling and grammatical errors are a tip-off that this message might not be from a credible and legitimate company.

To: "undisclosed recipients"
Date: Nov. 10, 2011
Re: Letter of intent

Hello,

I am a Civil Lawyer. I have a Client that has Interest in Investing in Your Company, can You be of Assistance?

I shall give Details when You reply.

Yours Faithfully,
Barr. Joel Kazeel.
Cell Phone: 234-82-72783469
Telephone: 234-1-8879801

Is it legitimate? There are many features to this email to suggest it is not. Please note:

  • This email is not personally addressed to you. It is sent to "Undisclosed recipients", which suggests it is likely been sent to hundreds, not just you.
  • There are spelling, grammar and punctuation errors, all which are common on scam emails targeting organizations.
  • The contact number is an international phone number, also common on scams based in other countries.
  • The email is short on details. How did this person get your name? What do they know about your business? Why have they not called you first?

Treat these messages with a skeptical eye.

Read a Telemarketing Scam Script

Here are scripts seized during an investigation of a toner supply scam targeting businesses and not-for-profit organizations.

Catalogue Pitch

(PDF; 20 KB; 1 Page)

Hi my name is_______. I'm calling from___________. We are sending out a free catalogue for the year 2001.

We would like to make sure the person responsible for ordering supplies receives the catalogue. Also, we need to know what type of printers you are using along with the model number to ensure you receive the right catalogue for your machines.

The make and model # is located on the front of your printer.

Thank you.

In the first script, the caller is asking for the make and model number of your printer. In exchange, you will receive a new catalogue.

Once the caller gets your name, as well as details of your printers and copiers, this person has everything he or she needs to make a second call.


Warehouse Script

(PDF; 50 KB; 1 Page)

Good morning/afternoon can I speak to _______. It's__________once again from_______. As you know we're the people who handle the supplies for______Copier. How is the machine working these days? If you do have any problems give your service guy a call that's what he's there for.

The reason I called is that we are in the midst of a major Warehouse move here at the company and this move is coinciding with Christmas!! What the company has decided to do is reduce the cost on the toner by 40%. It just means we will have to move less of the toner at the end of the day from one Warehouse to the next and do our customers a favor at the same time.

What I've done_________is to set aside_______box of the toner at the reduced price for you….Now your still at___________.

Before I leave you_______, it is as well coming up to Christmas and every year we celebrate with all of our long and loyal customers old and new. I am very happy and pleased to say that this year we're popping off something extra special because it's our 25th aniversary!!!!!

It comes in the form of a rare 375 ml bottle of French white wine…Actually it comes in either the French white or the Italian red. So out of the French white or the Italian red, which would you prefer red or white??

Great! What I will do then to save a little courier cost is pop the ________wine on the top of the________box(es) of toner. So make sure you get to the box before somebody else gets to it…Okay?

One other thing__________, there is an extra 2% off if you take care of the invoice within 15 days (That's on top of discount you're already getting). Where do I send the invoice?

Thanks and we'll see you in a couple of days.

The second script is a good example of an "assumed sale" tactic, where the target is asked to confirm information but is never asked directly if he or she is interested in purchasing the toner.

  • 1st paragraph: Because the fraudster asks specific questions about your copier, you may be misled into thinking that you have an ongoing business relationship with a legitimate company.
  • 2nd paragraph: You are pitched an incredible offer, a savings of 40%! Notice that you are not told what the regular price for toner is or what the sale price of toner will actually cost you.
  • 3rd paragraph: You are never directly asked if you want the toner, nor are you told the price.
  • 5th paragraph: Everyone likes to get something for free so by offering you a bottle of wine, you may be lulled into thinking about your bonus gift rather than focusing on the details of their pitch on toner.

Background:

These two scripts were used in a scam promoting the sale of toner products to businesses across Canada and the United States, as well as to not-for-profit organizations, churches, schools, universities and government agencies. Through an intricate and highly-detailed series of false and misleading representations, targets of the scam were convinced that they had an existing business relationship with Lexcan International Corporation and H&P Communications Inc. Businesses and organizations were persuaded to pay exorbitant prices for toner products they did not want and did not order. Those who refused to pay were subjected to aggressive collection practices and threatened with court action or collection agencies.

In March 2007, a fine of $1.5 million was levied against Lexcan and H&P, and the owner of both operations pleaded guilty to 11 criminal charges under the Competition Act and related charges under the Criminal Code.

Information on recent cases pursued by the Bureau are available under the "Latest Announcements" section on the right hand menu of this page

Read Victim Stories


The following are statements from people who have been targeted by scam artists at their workplace. To protect individual privacy, the names of people and companies have been changed.

1. Caught in a Phoney Invoice Fraud

On March 29, I was paying my bills, and along with a stack of 50 other things I had to get d one that day, I paid a bill from a company called Global Business Solutions and Surprises (GBSS). The invoice looked like any other invoice in the pile, and it wasn't a large amount. I assumed someone from our company had authorized it.

A few days later, in early April, Michael from GBSS called. He said he was calling to confirm our address so he could send us the final invoice. I thought this was a little odd, so I asked how many invoices there were. He said the next invoice would be the final one. Curious, I asked what the invoice was for, and he simply said to visit his company's corporate Web site. When I asked him who initiated the service contract with our company he said that I did. But I did not recall initiating anything with that company. He sounded official about it, so I let it go.

In early May, I got the next invoice. It was marked "Final" and because of the previous conversation with Michael, I paid it.

Then, the following month, I got several more calls from Michael, confirming the previous payments and saying again that he was going to send me the final invoice. I said I already paid the final invoice, based on the conversation we had in April. He said this was impossible because there were three invoices in total, and the third had not even been sent yet! So I said I would not send any more payments until he provided me with a contract that stated we were paying in three monthly installments, and confirmed what we were actually being billed for, since the description on the invoice was very vague. Well, this made Michael defensive, and he got rude, saying I had agreed to the three installments. Then he said he had my voice recorded where I had agreed to the installment plan, and that he could play back the tape recording. So I suggested that he do that, but he didn't bring it up again in the conversation.

Meanwhile, I received an invoice from a company called Data Data Data Now in June. A fellow named Mark called about it, saying it was past due. I said we had never ordered any goods from them, to which he replied that he said he would be forced to send the bill to collections and our business credit rating would suffer! The invoice reminder came soon after, along with phone calls. Then Mark said he had taken over the account for Michael (of the first company!), and played a recorded conversation back to me over the phone where my voice was saying "yes" to a certain question - but the recording was such bad quality, I couldn't even tell what I was saying "yes" to. I think it was just me confirming "yes" to the address they had for us on file.

Well, the harassing threats to hurt our credit rating really became stressful, and we decided to just pay on the condition that we got a letter saying there would be no further invoices. So, they sent us a written note confirming this was the last invoice, and we paid it in full.

2. Targeted by a Directory Scam

In July, I got a call from a man who asked me if I wanted to renew a subscription for a business directory. I asked for some details about the business directory, and he said it was a Web-based advertising registry. I said our company wasn't interested. That's when he said the cost of the final invoice would be approximately $300, and asked me if I would be taking care of this invoice. I wasn't sure what the previous arrangements were with his firm, so I said I would take care of it. Basically, I thought that because he said it was the "final invoice" that we must have received some service from them in the past.

Then I got another call from a woman, also from the same company, confirming my agreement to pay the invoice they would be sending, so I said I would. I still thought that our company had done business with them, but wanted to check. I dropped an email to Nancy in our accounting department, asking if we'd ever done business with this company before. She confirmed that no, we hadn't. My manager, Jim, called the company. They told him they had a recording of a conversation with me that they could use to prove my agreement. He said that anyone could tamper with a recording to make it say whatever they wanted, and that our firm would not be paying that invoice.

We reported it directly to the Competition Bureau.

3. Web Services Scam on a Seniors' Home

In January, I got a call from someone named Sophia. She was calling to renew our subscription for a Web service. I told her that we didn't have a Web site or need Web services, but Sophia said that they had already done business with us, and that she was going to be sending an invoice for the previous year.

Then I got another call, this time from a woman who was calling to confirm our mailing address, and asking how payment for the invoice would be made. I just said that we pay all invoices by company cheque, so she thanked me, and hung up.

Then I got another call from another woman, confirming the call from Sophia, and saying we'd soon be receiving our Web services invoice. Again, I asked what for, because we don't have any Web services. They insisted that yes, we do, and that I had ordered it over the phone. We argued back and forth, and then a few days later, I got an invoice for over $300!

The invoice had a Web site address on it, as well as a login ID and password on it for their Web site. I wanted to get a hold of them about the invoice, so went on their Web site to try to contact them. There was no contact information on the site. I saw there was a client area to log in, but I didn't use it because I was afraid this might mean I was using their service. But later that day, I thought that maybe logging in to their site would be the only way to reach them, so I did so. But the login and password were not accepted.

I decided to write them a letter to the address on the invoice, explaining that we're a non-profit organization, and that we only have fixed budgets, so there is no way we would have ordered Web services over the phone. But before I could send it, I got a call from someone named John asking when I would be paying the invoice. I read him the letter, and asked him about what a virtual listing was. He said it's when you go into their Web site, log in, and then enter your information which creates the Web page for you. I said again I did not request this service, but he insisted I did. He also said he had a taped conversation of the phone call in which I authorized the service. I agreed to hear it. It was a very fast speaking woman speaking to me to confirm our mailing address, and I was saying "yes," and "uh huh" and "we pay by company cheque." It was clear that I was only confirming information, not saying I would pay the invoice.

But when the recording playback was done, John said, "There you go," in a tone of voice that implied he had proven he was right. I was shocked he took this as agreement to accept the service or pay the invoice, and I told him so. He raised his voice, and asked me what my title was, and asked to speak to my boss. I told him I was the manager, and explained again that we are a not-for-profit organization, and that this could not have been approved. He got more angry, interrupted me and kept loudly saying, "When are you going to pay?" every time I tried to talk. Then he said, "You'll pay this!" and hung up.

I got another invoice marked "Final Notice," but this time it had my name personally on it, not our organization's! It requested payment in 10 days or the account would be re-allocated to the services of a collection agency.

It was at that stage I finally reported it to the Competition Bureau. The company was charged with fraudulent telemarketing and prosecuted.

Building an Anti-fraud Plan


Here are things you can do today to protect your organization from fraud.

  • Closely examine any ads or offers and ask questions about anything that's unclear. Review all unsolicited offers with a critical eye.
  • Inform yourself about the product or service offered and don't be pressured to act immediately. Take time to do your research.
  • Ask for information about the business address, product line and customer references. Any reputable organization will provide you with this information.
  • Hang up if you feel that this is not a legitimate offer or company. Trust your instincts.
  • Don't judge reliability by look and feel. With the help of a good desktop publishing software, a scam artist can produce a slick flyer, e-mail message or invoice with very little investment.
  • Always ask for a copy of the offer in writing.
  • Make it your policy not to agree to purchases over the phone. All purchases should be authorized in writing.
  • Review all invoices and charges regularly each quarter.
  • Be wary of requests to “update” your account information. Unidentified calls and e-mails to confirm names, business addresses, make and model numbers for office equipment or other seemingly routine information can lead to problems. You may be providing criminals with the information they need to gain access to others in your organization.
  • If you are told that you agreed to a purchase but don't recall doing so, ask for a copy of the order in writing.
  • Assign a limited number of employees to make purchases. Make sure that employees with financial signing authority understand what responsibilities are tied to signing their names on invoices and purchase orders.
  • Before paying, make sure you get what you ordered. Don't be bullied into paying for something because of threats to damage your credit rating.
  • Implement a reward and recognition program for employees who prevent your organization from being scammed or those who help uncover losses due to fraud.
  • Review your vendor list each year. Just because their name and address appears in your system doesn't mean that you should pay their invoice.
  • Invest in a firewall and ensure your anti-virus and anti-spam software is up-to-date.
  • Talk to your staff and colleagues about fraud. Decide how your organization will handle situations involving employees coming forward to report losses.
  • Download the Bureau's self-guided presentation, and protect your organization by learning the facts about fraud!
  • Report fraud to the Competition Bureau. Learn more about filing a complaint.

Train Your Staff to Stop Fraud


"FACT — Fraud Awareness for Commercial Targets: Practical Advice on How to Protect Your Businesses or Not-For-Profit Organization Against Fraud"

This downloadable self-guided learning tool is a powerful, and insightful look at mass marketing fraud and how it can victimize any organization, large or small.

Download: Presentation
(PDF: 763 KB; 22 Pages)


Table of Contents


FACT: What is Fraud Awareness for Commercial Targets?

The Fraud Awareness for Commercial Targets (FACT) campaign will help your business or not-for-profit organization to:

  • Arm you and your colleagues with the tools necessary to avoid falling victim to mass marketing fraud
  • Join the fight against scamsters
  • Protect your organization's bottom-line

Mass Marketing Fraud

A deceptive or misleading business practice where you receive unsolicited or uninvited contact via mass media (either by email, fax, telephone, mail or advertisement) and false promises are made to con you out of your money.

Mass Marketing Fraud is a Serious Crime

Mass Marketing Fraud is fraud committed over mass communication media—telephone, mail, and the Internet—as well as state of the art technology.

Scope of the Problem

  • Mass marketing fraud (MMF) continues to be a significant problem on a global scale. Fraudsters who engage in MMF employ business models which target victims external to their own geographic area, crossing municipal, provincial, federal and international boundaries. Organized crime groups involved in MMF have proven their ability to adapt business models to a changing environment. Frequently, a single organized crime group may be responsible for related cases across multiple jurisdictions, allowing for evasion of detection and prosecution of those responsible. In 2008, nearly 6 in 10 Canadians reported being targeted by MMF with losses in Canada estimated at more than $10 billion.
  • Estimated that 95% of victims of mass marketing fraud do not report it to authorities
  • Myth that scams only target certain consumer demographics (i.e. elderly , uneducated, naïve)
  • Those who lose money to scams are 30% more likely to be scammed again

Competition Bureau Experience

  • In 2006-07, 67% of fraudcases pursued by the Bureau under the criminal regime of the Competition Act were scams that targeted businesses

Competitive Impact

  • Scams in the marketplace undermine trust in legitimate business activities and negatively impact their profit margins
  • Fraud costs businesses and not-for-profit organizations millions
  • Canadian businesses are losing money annually to these scams, leading to increased costs that compromise their "competitive edge"
  • Losses to not-for-profit organizations impede their ability to deliver programs and services to those who need it most

Overview

What You Will Learn

  • Common Techniques of Fraudsters
  • Types of Business Scams
  • Key Phrases Used by Fraudsters
  • Why You May Be Vulnerable to Fraud
  • How to Protect Your Organization
  • How to Build an Anti-fraud Plan

Common Techniques of Fraudsters

Who Are These Fraudsters That Are After Your Organization's Hard-earned Money?

  • You expect: shifty, uneducated, creepy
  • They present: friendly, bright, efficient

Your Guard Is Down

  • You expect: a telemarketing sales call
  • They present: a call to confirm your address or resolve a shipping problem
  • You expect: high pressure tactics
  • They present: business as usual

Types of Business Scams: Office supply scams

  • Paper
  • Toner
  • First aid kits
  • Light bulbs
  • Rolls for credit machines

Why These Scams Work

  • Scam artists pose as your regular supplier.
  • There is little difference between brands so you will likely buy what's cheapest.
  • All offices need these goods, many are essential.

Profile of a Typical Scam

  • On 1st call, the fraudster gathers details to be used later.
  • On 2nd call, the fraudster gets you to agree to receive a shipment. This call is often recorded.
  • A shipment arrives. The products are overpriced and of poor quality.
  • The shipment can't be returned. You can't reach the company to discuss the matter.
  • If you don't pay, you get aggressive collections calls. The recording is used to prove that you "agreed" to a purchase.
  • You feel threatened or frustrated and so you agree to pay.

Types of Business Scams: Directory Scams

  • Industry listings
  • Top 100 companies in your city or nation
  • Who's who in your sector

Profile of a Typical Scam

  • You are asked to advertise within and/or purchase a directory targeting your sector or industry.
  • The directory never arrives, or contains no reliable information

Why These Scams Work

  • All organizations want to promote themselves — it's an easy sale for the scam artist.
  • Can consist of real information and bogus entries, but if you don't look too closely or use it, you may not realize that it's a scam.

Types of Business Scams: Phoney Invoice Scams

Profile of a Typical Scam

  • You receive an invoice for a service you commonly order so you pay it.
  • You put their address on your vendor list so other charges are paid without question.

Why These Scams Work

  • Invoice has the look and feel of a bill, from a legitimate company.
  • Amounts are low so the charges aren't scrutinized.

Key Phrases Used by Fraudsters

  • We are calling about a pre-authorized purchase.
  • We've had some delays in our shipping department and need to confirm your order.
  • I was speaking with you previously.
  • Do you require a purchase order or can I send it directly to you?
  • We'll be recording our call for quality control purposes.
  • May I ask what kind of printing equipment you use?
  • We are calling to confirm shipping details.
  • We are calling to confirm your account information.
  • You have a two-year listing with us.
  • I am calling to approve your advertising copy for our directory.

Why You May Be Vulnerable to Fraud?

  • You believe this doesn't affect you.
  • You are too busy to inform yourself about fraud.
  • You don't have processes in place.
  • You are distracted when you answer the phone, read email or pay invoices.
  • You don't have time to deal with aggressive collections calls.
  • You experience regular staffing changes.
  • You recognize the company pitching to you but don't pay attention to details.
  • You don't report fraud to the authorities.
  • You don't think the amount is large enough to be worrying.

How to Protect Your Organization

How to Say No

  • I need to see an offer in writing first.
  • Send me a copy of our order.
  • We only pay with evidence of a signed authorization.
  • I cannot agree to be recorded.
  • I need to consult my manager before making any decision.
  • I cannot accept a shipment without written proof that we've ordered it.
  • I'm not interested. Remove us from your contact list.
  • I will not give any financial information unless I am sure of with whom I am dealing.

How To Build an Anti-fraud Plan

  • Closely examine ads or offers and ask questions.
  • Ask for information about the business address, product line and customer references.
  • Hang up if you feel that this is not a legitimate company or offer.
  • Check with a third party, if possible, to verify it is a legitimate company or offer.
  • Don't judge reliability by look or feel.
  • Ask for a copy of the offer in writing!
  • Make it your policy not to agree to purchases over the phone.
  • Review all invoices and vendor lists each quarter.
  • Be wary of requests to update your information.
  • Assign a limited number of employees to make purchases.
  • Before paying, make sure that you get what you ordered.
  • Talk to your staff and colleagues about fraud.
  • Start a reward program for employees who prevent or uncover losses.
  • Ensure your firewall, anti-virus and anti-spam software is up-to-date.
  • Report fraud to the Competition Bureau.

Contact the Competition Bureau

Competition Bureau Canada
50 Victoria Street
Gatineau, Quebec
K1A 0C9

Report fraud online at: www.competitionbureau.gc.ca

Call toll-free at: 1-800-348-5358

Report a Possible Scam


How to File a Complaint

You may request information or submit a complaint against an organization that adopts business practices which may be in violation with the Competition Act, the Consumer Packaging and Labelling Act (non-food products), the Textile Labelling Act and the Precious Metals Marking Act administered by the Competition Bureau.

If you wish to file a complaint regarding a deceptive business practice, here is what we need to know to help you:

Personal Information:

Tell us about yourself. Please note that the information collected in this section is protected under the Privacy Act.

Target of Complaint:

Tell us about the company or organization that you have a complaint against.

Details of Complaint:

Tell us about your complaint. Provide us with detailed information using products and or services supplied, products name and description.

The Bureau is committed to providing excellent client service. Employees of the Bureau's Information Centre are available to respond to your questions, record complaints and direct calls from Monday to Friday, 8:30 a.m. to 4:30 p.m., Eastern Standard Time.

File a Complaint Online

You may make a general enquiry electronically regarding any of the laws under the Bureau's jurisdiction using the Competition Bureau Online Forms. The form will be sent to the Information Centre where appropriate action will be taken.

The information on the form will be submitted through a secure server that protects confidential Information. Personal Information collected on this form is protected under the Privacy Act.

We suggest you use the Online Forms to file a complaint.

File a Complaint by Phone or by Fax

You might prefer to contact the Information Centre by phone or by facsimile.

Monday — Friday, 8:30 a.m. to 4:30 p.m., Eastern Time.
Toll-free: 1-800-348-5358
TDD (for hearing impaired): 1-800-642-3844
Fax: 819-997-0324

File a Complaint by Mail

If you chose to mail your complaint, the address is:

Competition Bureau
50 Victoria Street
Gatineau, Quebec
K1A 0C9

Protect Yourself

Here are some tips to help you protect your organization from fraud:

  • Closely examine any ads or offers and ask questions about anything that's unclear. Review all unsolicited offers with a critical eye.
  • Inform yourself about the product or service offered and don't be pressured to act immediately. Take time to do your research.
  • Hang up if you have doubts.
  • Report it to the Competition Bureau
  • Always ask for a copy of the offer in writing.
  • Before paying, make sure you get what you ordered. Don't be bullied into paying for something because of threats to damage your credit rating.
  • Check with a third party to verify it is a legitimate company or offer.

Email scams are finding new creative angles every day, so question the legitimacy of every inquiry, no matter how official looking it may appear. The key is to recognize it, report it and stop it.

Pamphlet

Criminals PamphletCriminals know how to appear as organized, courteous and professional as your organization does. Why? Because they know that the secret to fooling you is to gain your trust and appear above reproach. It's that apparent legitimacy that makes thousands of businesses and non-profit organizations fall prey to scams every year, ordering goods – often repeatedly – from fraudulent vendors and then paying invoices for services that are never rendered.

(PDF; 992 KB; 2 Pages)

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