There has been an increase in the prevalence of a scam affecting the retail sector. The scam targets European distributors by fraudulently adopting the identities and reputations of well-known, high-profile retailers.
Our fraud and investigations team was recently contacted by a European distributor of electronics which had fallen victim to such a scam. It received a bulk order claiming to come from a well-known British retail chain. The distributor’s driver arrived at the delivery address, which turned out to be in a run-down residential area with no sign of a trading estate or warehouse belonging to the retailer. The driver was met by a group of men who told him they would need to unload the goods onto the street by hand. Needless to say, the distributor did not see the goods again and has not received payment for the order.
Shortly after delivering the goods, and after realising that it was the victim of a scam, the distributor received several further orders making use of similar false documentation but claiming to come from other large retailers.
We have now become aware of many similar attempted and successful frauds targeting other well-known UK and European retailers. The fraud appears to be backed by an organised crime group which steals the corporate identities of retailers using false email addresses, phone numbers and corporate documentation, obtains credit terms with European distributors, books deliveries to false addresses, and ultimately makes off with the goods.
What can you do?
Here are steps you can take now to protect yourself:
- Tell your distributors about this issue, explaining what has been happening and how they can protect themselves.
- Require your distributors to have in place comprehensive and adequate training for their own staff. Distributors should be alert to tell-tale signs of attempted fraud which can include: communications with spelling and grammar mistakes; low-quality logos on “official” letterheads or emails; email addresses which do not match with verified domain names; and unusual requests for new lines of credit.
- Agree clear protocols with third parties with regard to placement of orders. Appoint a trusted member of staff to act as a single point of contact for issues such as these.
- Speak to your industry peers and work closely with industry bodies such as the British Retail Consortium and National Business Crime Solutions.
- Lobby law enforcement agencies to direct their – sometimes scarce – resources towards resolution of this problem.
If you think fraudulent activity may be taking place, stop all communication with the purported UK company, contact your legal advisers and make an online report to ActionFraud (making use of the special code detailed here). Although the financial damage in this type of fraud is borne by the European distributor, the risk to the reputation of the retailers whose names are used in the scam is clearly very high. We are working closely with a number of retailers, trade organisations and law enforcement agencies, to share further intelligence and, ultimately, obtain legal remedies.