Shipping scam alert

Shipping scam alert

June 2019

Following a recent case of a UK-based company being targeted by overseas con artists operating a sophisticated shipping scam, TSJ’s Editor, Joe Simpson, provides some advice on what to do if you receive an export sales enquiry that involves using the buyer’s nominated shipper.

In a recent blog, Katy Devlin, Editor of Glass Magazine in the USA reported that; “Businesses are being targeted in an insidious new scam aimed at fleecing them of thousands of dollars in bogus shipping fees.”

Having recently been made aware of a recent attempt to run a similar scam on a UK-based manufacturing business, I thought it would be prudent to alert TSJ readers to this fake shipping scam, as it appears as if construction products are one of the scammers favourite hunting grounds.

The scam works like this.  A manufacturing or distribution SME receives a very creditable export enquiry, normally from Africa or the Middle East.  The order is urgent (contract deadline or similar excuse) and the “buyer” makes it clear from the outset that he intends to pay by credit card. 

The scammer has good product knowledge of the specific company being targeted, and is willing and able to negotiate on quantities, colours, formats, packaging presentation, etc. 

The name of the enquiring company also sounds legitimate; because it is very similar to that of a legitimate general trading company.  What’s more, the quantity of goods ordered is not so large as to raise suspicion, but large enough to get the sales team‘s full attention.

So, after a few e-mails back and forth, the final order is agreed and the invoice (normally pro-forma), is duly sent, via e-mail, to the “buyer”.

This is when the scam kicks in because this sting is not about the goods themselves, but the shipping charges.  The scammer contacts the business requesting that the invoice is increased to include the freight charges.

The scammer insists that the supplying business use a particular shipping company (for one reason or another) and provides a phoney e-mail address.  The business then contacts that “shipping company” which requests that the freight charges are paid upfront by cash wire transfer. 

The “shipping company” will even send the supplying company a very detailed shipping invoice, complete with customs clearance fees, etc (as the example at the end of this article shows).

The supplying business is fooled into making the payment for the shipping fees after having received the credit card details from the “buyer” for the invoice payment.  The supplier may even have checked that the credit cards have sufficient funds and are not stolen, but this is not sufficient protection because the shipping company’s e-mail address is a front for the scammers and the credit card details are stolen, probably from online card accounts, which may take some time to discover.

At the end of the day, the supplying business in the UK faces being out of pocket for the cost of the shipping which can several thousand Pounds.  Often the money is wired to a country that makes it almost impossible to trace or recover.  The use of wire transfer services also means that monies cannot be traced or recovered.

While TSJ has only seen a direct approach to specific businesses, it is believed that the scammers are also using bulk generic e-mails to numerous businesses.

Businesses need to be cautious when dealing with overseas orders from new customers and need to verify who they are dealing with before sending money or goods.  They should be very suspicious if it involves wire transfers, card payments, or fees to nominated shippers.

This is quite a sophisticated fraud, as the scammers have clearly done their research, and the victim has the false security of thinking that they will not be despatching any materials until the payment has cleared.  But they may well, in the period between receiving the stolen credit card details for the combined goods and freight costs, have unwittingly paid the shipping element as requested.

From the example TSJ has seen, these e-mails are more credible than most scams.  The supplier’s product information is accurate.  The shipping invoice is also very detailed and convincing, and both the trading company and the shipping company are both designed to sound like legitimate businesses.

There may be some of the usual Red Flags: such as typographic errors and poor grammar.  However, the quantities ordered are rarely so large as to cause concern: although the freight charges may well appear too high or too low.

Based on the experiences of its readers, Glass Magazine urges particular caution on orders that require long-distance shipping (often for products that could be sourced from a local supplier); orders that request use of a shipping company nominated by the customer; orders paid for with a credit card (that may have a different billing address than the shipping address); order placed using a Gmail, Yahoo, or other free e-mail account; and quotes for freight do not include a phone number.

Obviously, I don’t want TSJ’s readers to be put off pursuing any legitimate export enquiries, so here are a number of steps that can be taken before parting with any good or cash.

Search the company online

This may seem an obvious step, but the key here is to search the specific name used in the e-mail; and to watch out for a name that can hide behind a similarly-named legitimate business;  i.e. Upstanding General Traders when there is a legitimate business call Upstanding General Trading International.  Readers should also be aware that seasoned scammers are now able to create bogus websites that look and feel authentic. These may even feature images, reviews, and testimonials to make site appear legitimate.

So, when researching a company, don’t just check their website.  Look at their online reviews, if any, and pay attention to what other customers are saying about them.  A quick search combining the names of the ‘trading” company and the “shipping” company may well throw up similar scams.  It is also a good idea to check both companies online ratings, and avoid any service rated three out of five and less; or ones for whom you cannot find reviews.

Trading history and agent’s bona fides.

The number of years a company has been in business can also provide reassurance or  arouse suspicion.   You may also find that you are dealing with an agent claiming to work for a legitimate shipping company.  So, before contracting with an agent, be sure to request their details and run these past the shipping company they claim to represent.  And, when contacting the shipping company to verify the details, make certain that you only use the contact information listed on their website.  Do not use contact details provided by the agent.

To widen this out, any business that is expecting a package is a good target for scammers.  Scammers will send you an e-mail that looks like it is from FedEx, DHL, or another legitimate shipper, often in the form of a notification of package arrival or delivery failure.

This e-mail will often contain documents that you are supposed to print and take to your local parcel office.  The e-mail may also contain other links that request or confirm your personal and payment information; and may even tell you to take immediate action to avoid penalties.

Over the years, such shipping scam e-mails have been perfected, so businesses need to be very vigilant.  Scammers use names, logos, and other information from a legitimate company: so always looks at the sender’s e-mail address.  This is usually a red flag.  Legitimate shippers do not use GMail or other off-the-shelf e-mail addresses.

So always verify the e-mail address to ensure it is from the real company.  Be highly suspicious of any e-mails featuring poor grammar and spelling mistakes.  Never trust e-mails containing penalty threats.  And remember than any e-mail that does not feature your package order or tracking code is likely to be a scam.

Shipping fees and money transfers

Low rates and discounts are another a red flag, as the scammer wants you to rush the transaction.  Very high rates, justified by speed, are also likely to be a scam. 

Be particularly vigilant about potential customers that ask you to send the shipping fees to their preferred shipper; or those that point you towards a preferred vendor .  In such circumstances always thoroughly investigate before taking any action or, best of all, avoid these companies altogether to avoid getting scammed.

Some customers may request additional payment for package rerouting.  So always make sure that the logistics supplier can ship to your desired address before placing your shipping order.

Other shipping scams

In other similar scams, the “buyer” may ask you to use their shipping account because they can get a discount, or to use a preferred vendor they have worked with for years, or to use their shipping service because it is cheaper or more reliable.  Or, as noted earlier, another variation of the scam occurs when the “buyer” asks you to wire the shipping fees to their preferred “shipper”.    

But what’s the real reason they want you to use their shipping service?  If you use the “buyer’s” shipping account, they can easily contact the shipping company and reroute the order to another address.  Then, the “buyer” can open up a complaint asking for a refund because they didn’t receive their order.   You will not be able to prove that the “buyer” received their order and you face being seriously out of pocket.

The real reason the “buyer” wants you to wire the transport fee to their “shipper” is so that they can steal your money.  After you have wired the money you will find out that the order was made with a stolen card or bank account, and you may be held liable for returning the funds to the legitimate customer whose account was stolen.

TSJ’s advice is to only use a reputable freight service provider, such as a TTA member, no mater what the ‘buyer” requests.  If they won’t accept this arrangement, it’s a scam.  Never wire money to a company you don’t know and trust.  And, if a prospective customer asks you to use their shipping service, review their order for fraud carefully.  They may have used a stolen card or bank account to fund the purchase. 

 

Actual letter (names changed)

From:

Rashid Makemoremoney
Purchasing Manager
Made-Up General Trading

Actual industrial Area 2

Next to Taxi Rank

Dubai  U.A.E

We are interested in purchasing some of your products that we have found interest on.  This products are needed at our head office in the United Arab Emirate and before I go ahead and forward the list of items needed I will like to ask if our payment terms by Visa or Master debit/credit card form of payment is acceptable?.

Shipping will be handled by a preferred shipping company that handles all our shipping. We will appreciate your utmost response to this inquiry.

From:

Rashid Makemoremoney

I will like you to please contact the freight forwarder that we will be making use for this shipment and the name is Malicious Logistics with the below details to obtain a freight quote.

The Freight company will arrange the pick-up of my order from your store so you don't have to worry about the shipping processing at all.  Here is their contact e-mail address "export.malicious@gmail.com".

Kindly contact the freight company with the below details to raise an air freight quote.

 

Hello Mr/Ms Alison Smith,

Thank you for contacting Malicious Global Logistics for our services.  Below is the Express Air Freight quote for the shipments.

 

AIR FREIGHT QUOTE: 

Express Shipment (2 to 3 days): £1490.00 

Collection from your Store: £50.00 

Customs clearance documents: £40.00 

Customs duties & taxes in U.A.E: £40.00 

Goods full Insurance: £230.00 

Inland transit to U.A.E: £15.00 

Door-step delivery to the receiver: £30.00

VAT @ 20 %: £379.00

TOTAL COST: £2274.00 GBP

 

PICK UP :

The Tile Factory

Unit 1 Some Industrial Estate

Nowhere Town

Unrealshire

AB12 3CD

 

DELIVERY ADDRESS:

Made-Up General Trading

Actual industrial Area 2

Next to Taxi Rank

Dubai  U.A.E

 

Pick up will be made by our affiliate in your location after payment has been confirmed in our head office.  Our payment terms are bank to bank transfer.

So you would have to make payment for the amount quoted above before collection so that we can schedule the pick-up and settle all necessary custom duties and taxes for this shipment.  We have given you our best offer and hope our offer is accepted and look forward to serving you better.

 

Yours Sincerely,

Stephen Scammer

Export Regional Manager

Malicious Global Logistics

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