Businesses being scammed to make upfront payments

Roshan Jelal, Head of Fraud at FNB Commercial

As SMEs increasingly migrate to digital channels, fraudsters have taken advantage of the opportunity to revive the old Advanced Fee Fraud (419 scam), duping businesses to:

(a) make upfront payments for good and services, without the intention to deliver; or
(b) pay sums of monies, in advance, to facilitate the payment of loans or promised funds.

Businesses are exploited in two ways.

The fraudster(s) poses as legitimate suppliers who require an upfront payment before goods or services can be rendered.

Sometimes the victim is requested to partner on an urgent/major business proposal, whereby the fraudster requests the unsuspecting business to pay a third party upfront and add the cost to the final bill.

The details provided to businesses (victim/target) may vary however the common element is the promise of large sums of money, making the deal attractive.

Roshan Jelal, Head of Fraud at FNB Commercial says, “The aim of the fraudsters is to deceive the businesses into believing that they are dealing with a reputable supplier or business associate and then part with their hard-earned cash. Although this scam has been around for some time and consumer vigilance has heightened, fraudsters have taken advantage of digital platforms to revive the scam. Fraudsters mostly use email communication, vishing and falsely advertise their services online or via social media platforms in order to lure unsuspecting victims.”

“The eCommerce boom as a result of Covid-19, coupled with the increase of digital marketplaces have also played a key role in reviving the Advanced Fee Fraud (419 scam) for businesses,” adds Jelal as he shares guidelines on how businesses can protect themselves:

• Look out for unrealistic offers and discounts –It is always advisable to never pay money to get money. As the old saying goes – if it seems too good to be true, it probably is!

• Interrogate requests for upfront and urgent payments – this should always be treated as a red flag. The trick is that the unsuspecting business will always receive goods or services once they pay an upfront fee to assist the supplier to deliver. Varying reasons are provided for the fee, e.g., exchange control fees, customs duty fees, bank charges and problems with delivery.

• Vishing – fraudsters sometimes reach out to make business proposals which are often attractive. Always get as much information as possible to verify if the proposal is legitimate and find out who referred them. Even go as far as calling the client as well as third parties if it’s a project or huge business proposal.

• Don’t be duped by credentials – some fraudsters often go to great lengths to make their credentials legitimate. Always go a step further to verify their information, such as getting references from clients they have serviced in the past, check the website URL and spelling mistakes, physically going to their premises to check if the business exists, as well as meeting with the suppliers or business associates in person.

Fraudsters can also send you a link that directs you to a fake website where you enter your financial or personal information. If you must visit a financial institution’s or a service provider’s website, type their web address into the URL rather than clicking on links.

Also make use of the “Account Owner Verification” tab on FNB Online Banking to test that the name of the account accords with the account number provided, before paying a new supplier.

• Take precaution when choosing a supplier – sometimes fraudsters don’t approach businesses but set up traps through lucrative advertisements (often with rave reviews which is part of the elaborate scheme) for goods and services online or via social media channels. It makes it easier to be defrauded if you are the one who has approached the supplier.

“Lastly, imposters are not only after your money, but could also monetise data for identify fraud. Therefore, always ensure that your company’s private information is not disclosed to fraudsters, as well as third parties who are not entitled to receive it, or parties whose identities cannot be rightfully verified,” concludes Jelal.