Types of business scams

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."

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.

Could you spot this fake?

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.

Warehouse script

Good morning/afternoon can I speak to. It'sonce again from. As you know we're the people who handle the supplies forCopier. 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 doneis to set asidebox 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 25^th 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 thewine on the top of thebox(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.

• 1^st 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.
• 2^nd 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.
• 3^rd paragraph: You are never directly asked if you want the toner, nor are you told the price.
• 5^th 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 w ant 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.

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.

Table of contents

• FACT: What is fraud awareness for commercial targets?
• Mass marketing fraud is a serious crime
• Overview
• Common techniques of fraudsters
• Types of business scams:
  • Office supply scams
  • Directory scams
  • Phoney invoice 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
• Contact the Competition Bureau

Overview

Common techniques of fraudsters

Types of business scams: office supply scams

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

Types of business scams: directory scams

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

Types of business scams: phoney invoice scams

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 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

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.