Crooks buying resellers to defraud distributors
New scam doing the rounds in the channel sees criminals acquiring resellers and using them as fronts to commit high-value frauds
UK and European IT distributors are being targeted by a new scam whereby crooks acquire legitimate resellers and use them as a front to carry out high-value frauds.
The ruse - flagged up by IT distribution index ITdistri - has emerged over the past few months and sees the fraudsters targeting hundreds of thousands of pounds' worth of goods.
Talking to CRN, ITdistri owner Alain Godet said that although he had been alerted to the new form of fraud by a French distributor, wholesalers in the UK and other European countries are also under threat.
"Scammers acquire companies, whose owner seeks to retire, for a few tens of thousands of euros," he explained.
"They can then [make] large orders (worth hundreds of thousands of euros) from wholesalers. Once delivered, they vanish into thin air with the goods, without paying for them."
Godet said incidents of the new scam are relatively rare because the crooks must be well funded. This separates them from the more basic company-hijacking scams that have been widespread in recent years, to which Godet said the channel has become wise.
"This is not within the reach of everyone," he said of the new breed of threat. "However, the potentially high value of the frauds deserves wide publicity to warn the potential victims."
The crooks carry out their stings in the intervening weeks between acquiring the firm and when the acquisition is made official by the relevant local bodies, Godet added.
This makes it tricky to detect, he said. The best tactic to avoid being hit is to contact the firm's usual suppliers to find out if they are aware of any change of ownership and who their usual contact in the company is, he said.
"Then ask to talk to [that contact] several times over a period of a few days to ensure they are still there. If not, don't sell to them," was Godet's advice.
Laurie Beagle, divisional director at P&A Receivables Services, said he had not encountered this type of fraud before.
"I'd be concerned about this, as it is something new," he said. "A lot of fraudsters have plenty of money to play with. It will be down to the suppliers to be even more vigilant and to make sure they know who they are trading with and share information with other distributors."
Paul Cubbage, managing director of distributor Target Components (pictured), was also not familiar with the tactic of crooks acquiring active resellers with the intention of defrauding suppliers, but said it would be "a particularly difficult one to spot".
However, it is not uncommon for fraudsters to acquire dormant businesses, file a couple of years' accounts in quick succession and then start "trading", Cubbage said.
"We've seen it a number of times, and it's usually picked up by dodgy or irrelevant trade references, the filing dates on the accounts, and often that the business they've acquired was in a completely different sector," he said.
Godet said this new form of fraud was too nascent for his firm to have tracked in its newly launched online database listing nearly 80 scam structures it has been alerted to in the UK, France and Benelux. It shows the name, phone number and URL used by the fraudsters and the equivalent information for the legitimate companies.