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Avoiding Trade Credit Fraud

It can be difficult to identify a potential fraud but there are some warning signs to look out for that can assist in avoiding and certainly reducing the negative impact this can have on a business.

Losses due to fraud are not generally covered by Credit Insurance policies meaning your Insurer is not liable for this loss. However, there are some exceptional cases where we know underwriters have accepted liability, so having a policy may have added benefits!

The TL Dallas Group of companies and the insurers we place cover with are seeing significant increases in the number of fraud overdues or claims being reported by clients. In particular, ‘assumed identity’ fraud cases – this is when a third party assumes the identity of well established creditworthy businesses.

CEO fraud is the impersonation of a company’s CEO or high-ranking officer to try and trick an employee into transferring money. Unfortunately, as it is subsequently discovered, these payments have gone to the fraudsters account.

Currently, the main sectors affected are Food & Drink, IT and Construction. However, all sectors are being targeted.

Some points to be wary of include:

FINANCIAL STATEMENTS

  • Confirm the issued share capital stated in the Company’s accounts are consistent with the annual returns
  • Be wary of a Company that submits accounts shortly after its financial year end or a dormant company suddenly becoming active
  • Be wary of Companies filing above and beyond its filing requirements. Remember a ‘small company’ is required to submit abbreviated accounts to Companies House and ‘micro-entities’ are required to submit simpler accounts that meet minimum statutory requirements
  • Compare accounts to other Companies within the same industry and be wary of Companies that have filed accounts which appear ‘too good to be true’. lf the accounts are audited, check if they’re registered using http://auditregister.org.uk/Forms/Default.aspx
  • Conflicting trade sectors – eg. Companies House states ‘wholesale of food + beverages’, but their website/status report states manufacture of metal
  • Check the Directors do not have any association to failed companies or high volume of newly incorporated companies as this can be a warning sign
  • Frequent or sudden change/s in shareholders/directors or registered office can also be a warning sign

NEW CUSTOMERS

  • An unsolicited enquiry with a short/urgent delivery deadline – the potential new customer will be persistent and put you under pressure to open an account. There will be an unusually short period between first contact, order and delivery date.
  • No landline telephone number provided – only a mobile number. Calls are usually not answered but go to voicemail and then your call is returned. If a landline is provided, when you call it’s been disconnected or just rings out.
  • Mirror imaging of existing genuine email and website addresses. They are usually very similar to the company they are impersonating, however there will be subtle differences, i.e.:
    • Genuine company website address –www.tldallas.com
    • Fraudulent company – www.t-l-dallas.com
  • Professional looking website but with little functionality. The website will look OK, but basic and light on any details, landline telephone number etc.
  • Verify the website using Whois-Search – http://www.whois-search.com/
  • Be cautious with trade references and check them thoroughly – some recent cases we have seen have highlighted the trade references given were fraudulent and that associates, were also involved in the fraud.
  • The buyer is generally not interested in price with little or no negotiation – why would they be if they are not going to pay you!
  • Buyer requests to collect goods themselves from your premises/warehouse, often in a private car or unmarked vehicle
  • Being asked to deliver goods to a different company or an unknown third party
  • Buyer changing delivery address at short notice – use Google Maps or Royal Mail postcode and address finder to verify addresses
  • Potential customer is overly ready to supply information – trade references and accounts/managements accounts are available without being asked
  • Confirm that the supplied VAT and bank details are genuine

EXISTING CUSTOMERS

Be wary of last minute requests, from your existing customers, if they do not follow their usual established trading pattern – check the details out further and call your usual contact and confirm changes in writing.

Further useful information can be found here.

 

If you would like to discuss Credit Insurance, please call 01274 465 522 or 01324 717 466. Alternatively, email your details to credit@tldallas.com and a member of the team will be in touch.

 

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“TL Dallas has provided trade credit insurance for the last 10 years, which has bought great peace of mind, whilst supporting the company’s growth. The TL Dallas team ensures that ACS can secure credit insurance cover for new and existing customers, as well as giving the best advice on slow payers and claims. They have recently helped with an appeal regarding the payment of a claim, helping with cash flow. The pride they take in their work is truly inspiring going above and beyond. Thank you for everything you have done and continue to do for ACS."
Leanne CleghornACS Technology Group Ltd
“We have dealt with TL Dallas for many years and have always found the staff to be very helpful and professional in all that they do. They are able to provide specialist knowledge and a bespoke service tailored to our specific needs, and the fact that they have an office on Shetland is a huge positive.”
Gary SpenceLHD Ltd - Lerwick
“Truly a job well done and really appreciate all the discussions on our behalf.”
“I have been most impressed by the customer service from TL Dallas when a problem was discovered in the bathroom of a property which I own, and which is rented out. They were very patient when personal issues caused a delay in a quote coming to them and again when there was a delay with the invoice. We also couldn't be more delighted with the swift payment of our claim by the claims handling team at Aviva.”
“Just a brief note to say how grateful I am for all your help sorting out the hotel policy this year. Over the years I have valued your cooperation in getting not only the most appropriate cover but at the best price.”
“I immediately recommended TL Dallas given the experience and the excellent service levels we have enjoyed at our company.”
“Three generations of Whitby Morrison have worked with TL Dallas for insurance needs. The support and service received just gets better year on year. The team are always on hand to offer guidance and advice whilst scouring the market for the perfect balance between price and product.”
“As a business we have worked with several members of the TL Dallas team, and yet it always feels like you’re dealing with the same person. The transition is always seamless, and their customer knowledge is second to none. As a client, you really do matter to them.”
"Whether you’re an established business, just starting out, publicly or privately owned, TL Dallas will take care of your every need, product, and price.”
Ed Whitby
“I just wanted to say once again how impressed I always am with your team – no matter who I speak to – and I think that’s very special. Your team are always excellent with their service and we always tell as many people as possible about you! I just wanted to pass this on, as you are clearly doing something very right and have been for a long time!”
“Thank you for your excellent service over the years.”
“Thank you so much for all your help and ongoing advice. It is so good to have someone advising us who is local and has so much understanding, not only of the business, but all the other influencing factors, as well and who totally understands what our business needs.”
Mary SharpShetland Control Systems Ltd
“TL Dallas has offered us consistent, transparent, and clear advice over the years. A trusting partnership was established from day one and we feel assured that we have value for money alongside the cover we need, which in turn gives us peace of mind.”
James RycroftManaging Director, Vida Healthcare.
We have been dealing with TL Dallas for over 30 years and have always found them to be efficient. They have created insurance policies that are tailored to our needs, which has helped us evolve the company. Like every business, you only find out how good an insurance company is when you need to make a claim. This has been effortless when this has occurred and I strongly recommend TL Dallas for your insurance needs.
Peter DurkinManaging Director, Mini Gears (Stockport) Ltd
We are so grateful that you helped to resolve a situation that was causing us great concern. After being badly let down by our previous insurance provider, and after seven months of emails, phone calls and lost documents, we decided to try elsewhere. After only one week of contacting TL Dallas, we had our policy sorted and at a much lower price, which in this current economic climate makes a huge difference to us. Your professionalism and knowledge of the Social Care Sector is second to none and we are so pleased that we took the decision to move to TL Dallas. We will definitely be recommending TL Dallas to our colleagues within the care sector, and we look forward to a long and enduring working relationship as we move our business forward.
Phoenix Day Care CICAdult day care provider
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