Import Export Business Fraud & Scams Continued
with some personal experience comments about fraud and how
to prevent yourself from being a victim.
I know that many people believe you will never fall
victim of fraud, but you need to understand one thing, many
people from all walks of life have fallen victim and your
level of education or supposed status in life will not
protect you. If anything, these things make you an even
greater target for the fraudsters.
As a great example of how someone, very highly educated (a
Dentist) can fall victim to fraud, we published an article
from a old friend of mine from Singapore who happens to
publishes an International newsletter. The article is titled
"THE ESCROW SCAM" and it is still published here:
THE ESCROW SCAM
Do yourself a BIG favor after you are finished with this
post, go read "THE ESCROW SCAM" and see for yourself how
even the most highly educated can fall victim to fraud.
Getting back to my personal experience. I am well aware of
fraud because in addition to the over $100,000 in fraudulent
orders our import export business has experienced in the last
5 years, our one business account has also been hit two
times in just two years.
IMPORTANT POINT TO UNDERSTAND: If you have
electronic banking that allows direct deposit into your account for
wire transfers, pay checks, etc., in authorizing direct electronic
deposit YOU HAVE ALSO AUTHORIZED 'DIRECT ELECTRONIC
I learned this lesson about 12 years ago when the company my
wife worked for decided to use direct deposit as their sole
method of paying their employees.
When I saw the next statement from the bank (we did not have
Internet banking in those ancient days) I saw that her
employer had deposited the amount of her check 3 times. All
was well with that, but they subsequently withdrew the same
amount '3' times, then ultimately deposited the right amount
one more time.
When I contacted the bank about why the company was allowed
to take money "out" of the account, they stated that when you
authorize a company or someone to deposit funds, you are also
authorizing them to withdrawal funds?
OK! This was something new that very few people knew about
then or know about today and which can be very important to
you in the Import Export Business (or any business).
If you have a business account, which you should have if you
are in the import export business, you will most likely be
faced with requests to wire transfer payments to you from
time to time.
The potential payer of the bank wire transfer will need your
bank's ABA/Swift number along with your account number in
order to send you the money.
Now if you provide this information to a prospect in good
faith that they are going to send you funds to purchase goods
from you and this is the only business account you have, you
are exposing all of those funds to potential loss.
In the first bank account fraud incident two years ago,
there was approximately $350 in the account we maintained for
bank wire transfers. There was $325 from a transfer
that had just been received and $25 from the balance we
maintained in that account.
A scamster who had requested our bank account info under the
pretense of purchasing a trade directory hit our account with
four $500 electronic withdrawals for a total of $2,000.00.
The electronic banking system, as it is, transferred those
four $500 amounts from our account even though there was
only approximately $350 in the account.
The bank then proceeded to charge us 4 separate insufficient
funds charges and if insult did not add to the injury, they
also charged us 4 transfer fees all of which amounted to
Because we monitor our account on a daily basis we caught the
fraud as soon as it showed up (which is still the day after
it occurs), we notified the bank who froze the account and
we immediately filed the paperwork to have the bank
investigate the fraudulent withdrawals.
The bank employees informed me that this happens to them
several times a day and were very helpful in returning our
funds and removing the charges. Had we not caught this as
quickly as we did, the story may have been different.
The wasted time factor still comes into play here though.
The account had to be closed and this caused a great deal
of unnecessary time and effort on the bank and on us.
Shortly after this incident, the Maryland state banking
commissioner was interviewed by a Baltimore TV station about
this very thing happening on an ever increasing basis.
The commissioner was asked about this type of fraud. He
reluctantly admitted that there was little anyone could do
to prevent these unauthorized withdrawals because once you
authorize automatic electronic deposits, you are also
authorizing electronic withdrawals.
The second incident occurred just a few weeks ago during the
last week of April 2006.
Another scamster, who corresponded with me for nearly almost
two weeks "by email" regarding the purchase of a trade
directory wanted to pay via a bank wire transfer. I found
this quite suspicious from the start since the address they
were giving was from here in the USA.
As the correspondence continued more information led me to
believe this was a legitimate request (but I was still a bit
suspicious) so I provided our wire transfer account
information but began checking the account several times a
day rather than once a day.
In the pro forma information I provided this scamster, I
advised him that we maintain a balance of less than $25.00
in this account for security reasons and to prevent
unauthorized withdrawals. This was in the hope that $25.00
would not be worth their time and effort.
I did not hear from him again until I saw the pending
withdrawal from our account about two weeks later for $24.75.
Can you believe it - $24.75?
I immediately notified the bank but it was a Friday evening
so nothing could be done to prevent it. However, there was a
web site listed in the pending withdrawal information. I
looked it up and found that it was an online financial
transaction firm for porno web sites.
Apparently this guy figured, hey $25 is enough to pay for his
entertainment for whatever amount of time it would buy him.
It did not buy him much time though because the online
financial firm had a phone number, I called and told them what
happened and that the transfer from my account was
fraudulent. They immediately shut down his account and set up
a return of our funds.
Good news, the funds have been returned, but this incident
has again caused us and the bank much time and effort and
has cost me even more wasted time.
Why? To prevent any further unauthorized withdrawals, I had
to place a permanent freeze on the account for electronic
I can still use this account to receive my bank wire transfers
but I can no longer use my Internet access to transfer that
money to another business account which is what we normally do
to prevent the funds in the transfer account from being exposed
to this type of fraudulent activity.
Now, I must physically, visit the bank, produce my driver's
license and ask them to move the funds out of the wire transfer
account into our other business account.
Fraud costs everyone involved time and money. In this
incident I hope it also caused the fraudster the loss of his
OK, some points to help keep you from being defrauded in your
import export business or any business:
1. Set up a separate account just for wire transfers - most
banks have low balance, no fee, no interest checking. Set
one of these accounts up just for your wire transfers.
2. Keep a balance of $25-$35 in this account or just enough
to pay the fees for an incoming wire transfer.
3. Get Internet banking so you can monitor for receipt of
the transfers - as soon as you see the funds are available,
transfer them to your main business account.
This does not prevent a fraudster from doing as they did
with us and hitting the account with Multiple withdrawals
but it gives the bank more incentive to help you resolve
the situation if it is 'their' money they give out rather
4. Make sure you require 'complete' information from the
would be customer - do not give out your bank information
to just anyone who asks for it.
Again, this is not 100% fraud proof as I had this latest
fraudster fill out our Pro Forma request form before I
provided him with our information, however, by asking for
all of their contact details like we do on our pro forma
request form, it makes most fraudsters crawl back under
the rock from where they came.
5. Be very careful (sorry if I offend anyone here but it
needs to be said) of anyone who uses a free email account
like yahoo, hotmail, gmail or a host of others that are
You can find out if it is a free email provider by taking
their email address and typing in the domain.com, .net,
.org, .us, etc. into your browser window to see if it is
a freebie account.
Again, there is no guarantee that a real web site that
shows up today will be around a month or a year from now.
There are services that allow you to have a one page
web site with full email privileges for under $20.00 a
As President Reagan used to say, "trust but verify", but
when it comes to import export business transactions or
other business transactions involving bank wire transfers,
I say "verify, verify, and verify some more".
As time goes on and I can recall some of the many
fraudulent incidents that I have heard about in this
business, I will provide them in this blog. So be sure
to come back and visit with us often and subscribe to
our Global B2B updates so you will receive notice of when
these updates are published.
Until next time, I wish you the best.
Coble International Marketing Services
Import Export Business Help Center