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News: Industry News

Fraud Alert: New Scam Affecting Wholesale Distribution Members

October 25, 2019   (0 Comments)
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Attn: All Members


A particularly sophisticated and complex new scam is currently being perpetrated on our wholesale distribution members. The scam is not new, but the attention to detail and understanding of our wholesale over the counter account business is alarming.


In the most recent situation a distributor had several thousands of dollars of tankless product stolen from their location by the fraudulent use of an existing customer account. What is unique about this situation is that the scammers had the foresight to contact the distributor’s credit department and change critical information in the account that ensured that if any red flags were raised because of the order placed that any phone calls would be directed to the scammers and not the owner of the account. In short, they contacted the credit department and had their phone number added to the account as the primary contact number claiming that they had changed their phone number. This was done with a small account with little to any personal interaction with the location so a personal relationship did not exist.


The orders (quite large and not reflective of the customer’s business) did raise alarm bells, but when the distributor’s sales team contacted the number on file to confirm the orders instead of getting the owner of the account they merely contacted the scammers who of course confirmed the orders.


Further, these scammers do not themselves pick up the product from the distributor. They employ the use of “mules” to pick up the product. A “mule” is an individual who may or may not be part of the scam but have been paid to pick up the fraudulent purchases to avoid any direct contact between the scammers and the distributor.


We urge all of you to pass this warning on to your teams, regardless of business type, but especially urge our wholesale distribution members to be diligent in ensuring their teams are made very aware of this information.

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