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Scammers target industrial distributors

By Frank Hurtte

I grew up in my family’s oil distribution business. We sold everything from gasoline and diesel fuel to hydraulic fluids and cleaning solvents. We worked in a small town, actually a bustling county seat inhabited by 9,950 souls. We knew most everyone, but occasionally a stranger would pass through town. Most of the time these strangers were good folks, salesmen, relatives of local residents and occasionally a tourist taking the scenic route across the heartland of America.

Sprinkled into this gentle stream of benevolent tourist was another kind of traveler. Some called them con men, others referred to them as gypsies or simply travelers.Roaming across the country, this group of criminal targeted an industry. They understood how business worked and took advantage of their knowledge. These gangs often stalked a location until the busiest hour or during lunch hour. In a few short moments, they would swoop in and make off with hundreds of dollars in merchandise and be in the next county before you even realized it.

The good news is our industry had a “coconut telegraph.” When somebody got hit, they started a phone chain where other distributors were quickly notified. I can still remember my dad coming out of his office rounding the team up and saying, “They just hit Springfield and there’s a good chance we’ll be next.”

The times and technology have changed but the evil lurking in the minds of men remains unchanged. And, like the dealer network “coconut telegraph” of my father’s time, consider this your warning.

Scammers go modern and they’ve targeted industrial distributors
This is not hypothetical. Since sending out a warning via this publication’s online newsletter, we have heard from dozens of distributors, many with actual losses and even more with near misses. A single mistake can cost tens of thousands and even a near miss might result in freight and restocking charges.

Our online presence, things like websites, cross links to manufacturers, advertising and social media, identify us as distribution businesses. Further, we publish a lot of information and contact email addresses to allow customers easy access. At the same time, we are providing fodder for scammers. Trust me when I say, the new breed of scammer knows how to use Google keyword searches. They know who you are.

Here’s what started this whole thing off.

A couple of months ago, River Heights Consulting received a request for quotation from a major public university. Looking at it closely, I debated as to whether it was fair for me to forward it to a friendly distributor near the school. But I looked again.

The email address for the university didn’t look exactly right. I mean how many big time public institutions have their purchasing department using “@yahoo.com” email. Still, maybe there was a reason, so I did a search on the college. A strange message came up from the purchasing department. Looking further we discovered dozens of web-based announcements from other universities. Do a Google search using these words: university, purchasing and scam. The short list of universities with posted scam warnings looks like the news feed on Sports Center: Ohio State, Oklahoma, Florida State, University of Washington, Alabama, Brown, Princeton and the University of California. But the scammers appear to have moved on to faking large industrial procurement groups.

In the next week, I received multiple requests for similar products from other organizations. Here are a couple of examples:

Dear Distributor,
Let me have the price cost for these product.
1,ESV373N04TXB - Lenze AC Tech SMV Series Drive: 50 HP (37 kW), 480V 3Phase input in NEMA 1 enclosure
2,ESV183N04TXB.Lenze AC Tech SMV Series Drive: 25 HP (18.5 kW), 480V 3 Phase input in NEMA 1 enclosure also With the shipping cost to Romulus, MI 48174 Via Ups next day delivery.
Let me know the type of credit card you do accept for the payment.
Regards,
Cathy

Attention Sales dept,
It’s our great honor and privilege to have you as one of our vendor or supplier. My name is Nathan Andridge, Senior Director- Purchasing for Ohio State University.
we are directed to your location to purchase some of the below Listed items.

Please indicate all prices FOB our place of business with our payment term via Net due in 30 days after the invoice date and indicate when your price quote shall expire. Advise as soon as possible with price quote so I may prepare the PO and have it send to you to finalize the order.
Best Regards,
Nathan Andridge
Senior Director- Purchasing
Ohio State University
2650 Kenny Road
Columbus, OH 43210, USA
800-217-2051 Phone
614 350-4878 Fax
andridge.22@purchasingosuedu.com

I guess business in scam land is picking up. Notice how the quantities have jumped in this order for different but still industrially focused products.

Protecting yourself from scammers
It can’t be stated strongly enough, these people are crooks. What’s more, a few of them are criminals of the worst kind: intelligent, well financed and organized.
No doubt, a few of them will find their way to this article. With this in mind, understand that some of them will find ways to neutralize your best efforts to thwart their thievery. However, here are a half dozen rules to consider:

• Poorly written emails are your first line of defense. You can assume a good many of these people are working from cramped internet cafes in third world countries. Many cannot speak English well and are following a script to get their requests into your inbox. If you get these, don’t respond, don’t taunt them, just delete and move forward.
• The email inquiry comes from a generic email account. Trust me, major universities, large corporations and even small to mid-sized companies don’t use Hotmail or Gmail accounts. These will look impressive. The logos will be in place and the jargon will be very convincing. Further, don’t be fooled with official documents. Truth is, many of the scammers have learned to mix real and fake documents.
• If the customer is from outside of your normal territory, ask yourself why did this person decide to reach out to my company? While you have great service, maintain ample inventory and all the rest, why did they choose you?
• If the customer has never done business with you before, why are they suddenly asking you to provide a quote or even asking to buy without some kind of bidding process?
• Never call the number provided on the email. The last “scam order” we reviewed came from a large Pittsburgh-based corporation. The name of the request was good, the address was real but the phone number rang to a Google number which forwarded us to a “gentleman” whose command of the English language did not come anywhere close to someone carrying a director of procurement title.
• Never accept a certified check. Many people believe bank-issued certified checks are as good as cash. In reality, they are one of the most commonly counterfeited financial instruments in the world.

Before we go . . .
Understand, the weak link in your organization is the newest person. Don’t assume everyone knows the ground rules. Review the topic regularly. Never allow sellers to step outside of the normal credit approval policy.

Finally, if you have been hit by one of these scammers, please send me a note along with some details. Just like the old “coconut telegraph” back in my dad’s day, we need to look out for one another.

Straight talk, common sense and powerful interactions all describe Frank Hurtte. Frank speaks and consults on the new reality facing distribution. He blogs on “The Distributor Channel” at http://thedistributorchannel.blogspot.com. Contact River Heights Consulting at frank@riverheightsconsulting.com or via phone at (563) 514-1104.

This article originally appeared in the Jan./Feb. 2017 issue of Industrial Supply magazine. Copyright 2017, Direct Business Media.

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