Fraudulent orders cost businesses millions every year. Spotting fraud and stopping it in its tracks takes a keen eye and a skeptical outlook.

These following 3 flags serve as a starting place for spotting fraud:

Flag 1. A signed credit application

The starting point for most orders is an email with a request for a quote. Fraudsters like to include the request for 30-day terms along with that. Most of the time, honest customers are cautious about signing anything and that includes a credit app. So when a customer follows up the request for a quote with not only a signed credit app but also a financial statement or a bank reference right off the bat, it’s heads-up time for the credit professional. Something is wrong.

You know this process. Legitimate customers can most certainly be in a hurry, but eager to sign things and provide detailed financials? Not so fast! Fraudsters, on the other hand, rush everything. They’re banking on hasty decisions and fast transactions.

Flag 2. Vetting process

The ‘Same Name Scam’ is when thieves will use legitimate company names to place orders. They will sometimes include the names of the CFO’s or the VP of sales on the orders, which you know, isn’t at all typical as they aren’t the ones who place orders. By adding “.com” or “.net” to the end of the business name, they’re hoping that you recognize the legitimate business name and therefore, process the order with no further thought. That in itself is a red flag as businesses don’t typically use “.com” on their order masthead.

Flag 3. Shipping address discrepancy

It’s a clever trick for a Same Name fraudster to follow up a legitimate order from a legitimate company with a fraudulent order from their bogus copy. It often goes down like this: An order from the legitimate company shipped last week without a hitch. A follow up order is placed a week later with what appears to be the same company name. When it’s fraudulent, the shipping addresses won’t match between those two orders and it’s not uncommon for the fraudulent order to be a “rush”. They’re hoping that the combination of the successful delivery of last week’s order and the ‘rush’ nature of the new one, you’ll process the rush order with no further investigation.

Catching the address discrepancy before the order is processed is the key here. When they don’t match, start making phone calls. And in that process, forget about using any information on the original PO or email order. Email requests from a fraudulent source will of course include fraudulent contact information and phone numbers. Your skepticism is an asset! Go directly to the company website. Call the purchasing department to verify the names of those making purchases. And if you confirm that it’s fraudulent activity, provide the victim company with the fraudulent email correspondence and everything the would-be thieves have sent to you.

Many of our blog posts emphasize the importance of fostering a relationship with your customer and this is a good reason to do so. The better you know your customer, the easier it is to spot an order that didn’t originate with him.