Corporate Compliance ServicesPO Box 820670
Pembroke Pines, FL 33082-0670
BBB File Opened: 07/29/2014
- Mr. Michael C. Singh, Owner
- Compliance Consulting
Alternate Business Names
- Compliance America Group
- Discount Business Services
Alerts & Actions
Products & ServicesBBB Tips: Phony Invoice Schemes Calls, Mail, Fax, etc.
The best protection against phony invoices is knowledge and vigilance.
September 08, 2014
BBB industry tips are general in nature and are not based on our BBB file experience with this company.
The best protection against phony invoices is knowledge and vigilance. The U.S. Postal Service reports that phony invoice scam artists succeed in collecting a significant percentage of all the bills they mail, but notes that due to the nature of the crime, it is impossible to determine the exact extent of losses. However, the fact that these types of con artists mail thousands of phony invoices, and solicitations disguised as invoices, on a regular basis, points to an annual loss to businesses that may run into billions of dollars.
Scam artists that operate phony invoice schemes owe their success to companies that have careless bookkeeping practices, inattentive or ill-equipped employees, and faulty corporate communications that blind each division of a company to the important responsibilities of another division. By educating your employees to identify common invoice scams, you can help them to defend your business against these swindlers.
PHONY INVOICE SCAMS: The anatomy of a typical phony invoice scheme is as follows:
-The Call: While there is no set formula for these invoice schemes, most involve the use of an initial telephone contact. The call helps the swindler obtain the names of key business contacts, as well as some important details about the operation of the business and its products or services. The persons making these calls are, for the most part, remarkably smooth operators. Often brazen and forward in their approach, they have been known to talk their way through a chain of receptionists, secretaries, assistant managers, supervisors, and vice presidents to gain access to heads of companies. In most cases, however, they need gain access to only lower-level employees.
-The Invoice: The con artist's next contact with the intended victim usually comes in the form of a phony invoice sent through the mail. The invoice, which includes names, figures, and other details that add to the appearance of legitimacy, may be paid unwittingly along with a number of other routine bills. In many cases, the amount of the invoice is just small enough to slip by the check writer's attention. The swindler has had considerable experience calculating the most effective dollar amount, depending on variables such as the size of the firm, and the control it seems to have over its management system. Thousands of mass-mailed invoices, each for a small sum, may prove more lucrative for the con artist, than several large invoices.
-The Scare Tactic: Scare tactics sometimes are used to increase the odds of success. A phony invoice, or past-due notice, stamped "Pay This Bill Now" or "We Are About to Start Action" may intimidate the victim into rushing to make out a check without carefully investigating the supposedly delinquent charge.
SOLICITATIONS AS INVOICES: One of the most common variations of the phony invoice scheme are solicitations disguised as invoices. These documents, which are actually solicitations for the purchase of goods or services, are carefully designed to look like legitimate invoices for goods or services ordered and received. In some cases, the small print may identify the bogus bill as a solicitation. The deceptive solicitation may be received through the mail, or it may be presented in person by a con artist who visits a business office on the pretext of saving the company handling charges. The business that pays a solicitation disguised as an invoice may receive the merchandise or service it was duped into ordering; more often, it will not, and efforts to trace the fraudulent firm that issued the "invoice" will prove futile.
PHONY AD SOLICITATIONS: In the case of phony advertising solicitations, the "advertising salesperson" may make the transaction seem routine, asking if the business wishes to renew an ad allegedly placed "last year." Often the invoice is supported by fabricated proof of the ad's placement-a trumped-up "clipping" created by the con artist using an actual company ad. Most advertising solicitation schemes involve the issuing of invoices for ads in magazines, newspapers, or directories targeted at specific special-interest groups. The promoter may try to manipulate the victim's emotions, or create embarrassment in order to sell an ad. Often the sales pitch implies that part of the advertising revenues will be used to support community programs. In another twist, the businessperson, fearful of appearing uncooperative, may be pressured into placing an ad in a phony law enforcement publication. One red flag is an unusually flexible salesperson that quickly reduces the advertising rates when a customer seems hesitant.
BOGUS YELLOW PAGES BILLS: If you receive an invoice for renewing your advertisement in a local business directory, beware of the scam in which solicitations disguised as invoices for yellow pages listings are mailed to businesses by hundreds of copycat directory publishers. These con artists take advantage of the fact that neither the logo nor the term yellow pages is a registered trademark. Businesses receiving "invoices" for yellow pages listings are advised to scrutinize them carefully. If in doubt, contact your local BBB (www.bbb.org) for a report on the soliciting company. And remember that, with few exceptions, charges for legitimate directory listings are included in advertisers' monthly phone bills, not billed separately.
PHONY FAX DIRECTORIES: If your company receives an official-looking invoice requesting payment for a listing in an international business telefax or telex directory, be on the alert. The "invoice" may be a solicitation in disguise, issued by a fraudulent "directory company." Often, the directory does not even exist. In fact, the fine print on the invoice may simply indicate an intention to print the directory- making legal recourse nearly impossible, if you find out about the scam only after you have paid the bill. To further complicate matters, the address to which you are directed to mail your check, often a post office box, may be nothing more than a mail drop. To avoid getting taken by a phony fax directory scheme, make certain your accounting department is aware of the scam, and remember, legitimate fax directory publishers generally do not charge for listings.
FEDERAL LAW: Federal law is clear and specific in its position on solicitations. It is against U.S. Postal Service regulations to mail a bill, invoice, or statement of account due that is actually a solicitation, unless it bears one of the following disclaimers:
THIS IS A SOLICITATION FOR THE ORDER OF GOODS OR SERVICES, OR BOTH, AND NOT A BILL, INVOICE, OR STATEMENT OF ACCOUNT DUE. YOU ARE UNDER NO OBLIGATION TO MAKE ANY PAYMENTS ON ACCOUNT OF THIS OFFER UNLESS YOU ACCEPT THIS OFFER; or THIS IS NOT A BILL. THIS IS A SOLICITATION. YOU ARE UNDER NO OBLIGATION TO PAY UNLESS YOU ACCEPT THIS OFFER.
One of these disclaimers must be conspicuously printed on the face of the solicitation in at least 30-point type. Print colors must be reproducible on copying machines and cannot be obscured by folding or other means. If the solicitation is more than one page, the disclaimer must appear on each page. If it is perforated, the required language must appear on each section that could be construed as a bill. The disclaimer cannot be modified, such as "legal notice required by law."
Regulations regarding copycat "government documents" require the following disclaimer to appear, in conspicuous, legible type, on the face of the solicitation:
THIS ORGANIZATION (or PRODUCT or SERVICE) HAS NOT BEEN APPROVED OR ENDORSED BY THE FEDERAL GOVERNMENT, AND THIS OFFER IS NOT BEING MADE BY AN AGENCY OF THE FEDERAL GOVERNMENT.
Also, the mailing envelope or outside wrapper must say in capital letters and in conspicuous, legible type:
THIS IS NOT A GOVERNMENT DOCUMENT.
Mailing solicitations that do not meet these requirements can result in a U.S. Postal Service stop order under which responses are returned to the sender, cutting off the soliciting firm's source of revenue.
QUICK CHECK LIST: Before placing orders or paying invoices, take the following precautions:
-Never place a phone order unless there is no doubt a firm is reputable.
-Get everything in writing and check out the company with your local BBB.
-Check your records to confirm claims of previous business dealings with a company or seller.
-Establish effective internal controls for the payment of invoices.
-Channel all bills through one department.
-Have employees fill out pre-numbered purchase orders for every order placed.
-Check all invoices against purchase orders and against goods or services received.
-Verify all invoices with the person who gave written or verbal authorization.
-Clear all invoices with the appropriate financial staff.
-In a dispute, if the invoicing company says it has a tape recording of an order, insist on hearing it.
HOW TO PROTECT YOURSELF: Mail Fraud Report Before completing a business transaction, Postal Inspectors recommend that you contact the BBB or the Office of Consumer Affairs in the area where the firm is located to get any information available on the company. If you have Internet access, you can get information on companies from the BBB online at: www.bbb.org, and from the Attorneys General Consumer Protection Division of each state at www.naag.org.
Remember: If a deal sounds too good to be true, it probably is! If you receive a phony invoice, or a solicitation disguised as an invoice, use the following procedure to report the matter to the U.S. Postal Service and your local BBB:
1. On the envelope in which the phony invoice or solicitation arrived, note the date received and sign your name. Be sure all of the solicitation materials are kept with the envelope in which they were received.
2. Get and fill out a Mail Fraud Report, available at any local post office.
3.Send the Mail Fraud Report and copies of any bills, receipts, advertisements, canceled checks (front and back), etc. to the:
Inspection Service Support Group 222 S. Riverside Plaza, Suite 1250 Chicago, IL 60606-6100
Keep the originals for your records. Also send copies to your local BBB.
Note: If you become aware of the scheme only after payment has been made on the fraudulent invoice, immediately contact the Chief Postal Inspector, your local police department, and the BBB. In most cases, you will be instructed to stop payment on your check or money order. The postal authorities should also inform you if any recourse is possible. If potential losses are considerable, contact your attorney for help in expediting your case.
To learn more about schemes that target businesses, contact the following:
YOUR LOCAL BETTER BUSINESS BUREAU Web site: www.bbb.org
FEDERAL TRADE COMMISSION at 202.382.4357, Web site: www.ftc.gov
U.S. POSTAL INSPECTION SERVICE at Web site: www.usps.gov/websites/depart/inspect
U.S. SMALL BUSINESS ADMINISTRATION at 1-800-U-ASK-SBA Web site: www.sba.gov
YELLOW PAGES PUBLISHERS ASSOCIATION at 303.333.9772 Web site: www.yppa.org
* If you find any of the web sites listed above to be offline, please contact the respective organization. Also, be aware that the above phone numbers may be subject to change without notice.
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