Sourcebase Reports

Country briefing exerts and analysis from KCS Group

Business risks: The scam

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Business scams are by their very nature a problem for commercial organisations due to the fact that many rely on human good nature and a touch of naivety. Due to this, the amount of stories in the press and media are relatively low as the companies and individuals involved are almost always extremely embarrassed that they fell for the scam in the first place and sometimes for quite substantial amounts, which have ranged from between £50,000 to £250,000.

SMEs are a particular target of business scams and, in addition, many of the tricks played on private individuals often reappear as business scams, like phishing and forged cheques.

And, as we know, the crooks don’t stand still. They are constantly dreaming up new scams and variations of well-established ones.

Cheap bailout business loans or commercial investments

If you are an officer of a business and have never had to borrow money to support the company you are an unfortunately a rarity. These days, with the economy under pressure, many cash-strapped and struggling commercial organisations are lured into loan or investment deals that simply appear to good to be true.

Analysts within the commercial risk business will recognise the signs that when someone wants to believe something, they will naturally ignore evidence that does not fit what they are looking for. In this case, really wanting the investment or loan to be a saviour. A classic case of Confirmation Bias some officers of the targeted companies cannot believe their luck when they find an online lender or loan-arranger apparently prepared to help them out, sometimes even with remarkably low interest rates and repayments.

If it is a business or commercial scam it will almost always involve a request for money, using such plausible sounding instruments such as advance fees (usually the first couple of months’ payments), an arrangement fee or some kind of Assurance Bond. The common theme will be the victim having to pay money out to the scammers first in order to get hold of the larger sum of money in the loan or investment deal they think is real.

The scammer will usually offer you:

  • High, quick returns and sometimes tax-free benefits
  • Share, mortgage or real estate investments, high-return schemes, option trading or foreign currency trading
  • Guaranteed low interest loans
  • No risk or low risk investment, as you can sell anytime, get a refund for non-performance, have insured or ‘guaranteed’ transactions or swap one investment for another
  • Inside information, the opportunity to invest before a public float or discounts for early bird investors

The loan, of course, never arrives and the so-called lender disappears with your advance payments once they have been made.

Although not an uncommon tactic, the fraudsters have advanced and moved on since the all too famous Nigerian millionaires needing your help emails. KCS has dealt with these scams and frauds since the 1990s and what distinguishes the scams now is that the internet allows the scammers an invaluable tool to help establish their credentials behind unwitting but financially sound commercial organisations.

This being said the internet used correctly now allows Risk Companies to investigate the opaque machinations and create transparency around the issue.

All three types of advance payment may be legitimate, though highly unusual. As in all cases where you are asked to hand over money to someone you do not know check them out independently.

Early Warning Signs:

  • Says you need to make a quick decision or you will miss out on the deal
  • Claims they are a professional broker or portfolio manager and sounds professional but is actually following a script
  • Personal email addresses rather than commercial (Nasdaq@outlook.cominstead of smith@nasdaq.com)
  • Alternate phone numbers and contact details
  • Uses a name or claims to be associated with a reputable organisation to gain credibility e.g. NASDAQ, Bloomberg
  • Offers you glossy prospectuses, brochures, share certificates or receipts or directs you to a valid website that they hide behind.

KCS Group is a Strategic Intelligence and Corporate Security Company that specialises in these discreet due diligence checks. Get in touch if you require support or help with any potential scams that you are worried about within your company.

Do not accept anyone’s word, carry out due diligence and remember, if the individual is phoning or emailing you and uses ‘Esq’ after his name, Run.

 

Stewart Rowles LL.B (Hons)

Assistant Director / Operations

Knightsbridge Company Services

Part of KCS Group Europe Ltd

 

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This entry was posted on April 4, 2016 by in Uncategorized.

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