Last year Jeff Brown, head of commercial solutions at Equifax Canada, saw an increase in a digitally engaged scam in the construction sector. Criminals who claim to be a legitimate contractor would order supplies that could not be easily identified, such as wood or sanitary units, for delivery to an assumed work location – only there was no work location and the orders were scamming. By the time the real contractor knew what happened, the materials were sold on the black market and the fraudsters had been cleared.
“Business-to-business relationships tend to work on net payment conditions. What that means that you can have products delivered to a non-standard location and those products do not have to be paid to the supplier for 30 days,” says Brown. “That buffer can work as an escape window for scammers.”
After having worked a few times, the scam spreads. “When scammers see something they can benefit from, they double and it will be a trend that can eventually become a systemic problem,” says Brown.
Why small companies are attractive goals for fraud
Small companies such as contractors have specific characteristics that can make attractive goals for fraudsters, including:
- They act in larger numbers than most consumers. “The average working capital loan for a small company is around $ 40,000,” says Brown.
- Owners of small companies are often not aware of their creditworthiness and may not keep up with the credit report of their company.
- Business credit information is more easily available than personal credit information, because it is less subject to privacy laws and companies often want to demonstrate more transparency to encourage others to work with them. “Companies have to spend money to make money. There must be an open network for companies to function,” says Brown. By looking at the credit reports of a company, fraudsters can find the typical bank balance of a company and those who are their largest suppliers, for example.
- Companies usually have more starting points than consumer accounts for criminals to attack. They can continue or not only occur if the owner (s), but also employees. “Companies have a greater disadvantage of potential obligations,” says Brown.
Red flags for Canadian companies to pay attention
It is difficult to predict what form the next wave of small companies will take. Fraud is constantly evolving and the tools that fraudsters often use. Artificial Intelligence (AI) has made the rapid collection and analysis of company information more accessible, while spoeling (making fake) business images and videos can make it harder to see what really is versus what fake is. Yet there are red flags for business owners and employees to pay attention:
- E -mails from organizations with which you normally do not do business, or e -mails that use unknown or wrongly spelled domain names.
- Communication that demands rapid approvals.
- Callers who say they spoke with a mentioned boss or colleague who approved a transaction that should be completed. “A fraudster can easily get online names and titles from company managers,” Brown notes.
- Every offer that sounds too good to be true, and that with suspicious attachments, must be approached carefully.
Larger companies include anti-fraud brotocols in their onboarding and continuous training, something that small companies cannot always offer. But it helps if employees become familiar and enabled to use their own common sense around potential threats.
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Keep an eye on your credit reports
One line of defense is to often check the credit profile of your company. It is not as easy as a consumer credit report; It did not come down to a single score. Instead, it contains a risk score for company failure that tells suppliers and financial institutions, regardless of whether a company is a feasible partner. It also has a delinquency score that relates to the history of the company to pay bills on time, whether or not in full or not at all.
Business credit reports will also list the financial obligations of a company. “If you see a transaction that you do not recognize about your company’s credit report, you can investigate and possibly dispute. Conversely, if there are long -term business relationships that are not indicated in the report, this may be in your interest to add them,” says Brown. “If you have had a relationship with a company for 10 years, it will have that history of good payments to help you get the best possible rates and the best possible products,” says Brown.
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What if your company is cheated?
From the perspective of the fraudist, the beauty of the construction wendel is that it is not easy to clear who is liable: the company whose name has been used, the supplier or the financial institution that performs the transaction. While the parties sort that out, the criminals are getting away.
That is why it is important to take steps as quickly as possible if you think your company may have been cheated, including:
- Check your company’s credit report to see if an unauthorized transaction has taken place
- Contact the other parties at the transaction as soon as you notice something strange
- Reporting to your local police and the Canadian Anti-Fraud Center.
This article is sponsored.
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