Collection Agency Scam article -- from ACA Intntl magazine

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Posted: Thu Apr 16, 2009 1:59 am

"Beware of Collection Scams," April 2009 Collector

Cautious action and established procedures prevent ACA member from being victimized by international scam

By Harry Strausser III, IFCCE, MCE

Managing a collection agency brings with it a multitude of operational, profitability, staffing and litigation challenges. However, just as agencies have learned methods to negotiate some of these minefields, another danger arises: fraud directed at collection agencies. I know about this firsthand, as my office was a recent target.

Credit and collection professionals should be aware of some recent activity that could potentially bankrupt a smaller firm if the proper due diligence is not practiced. What follows is an outline of what happened to my company.

In early February 2009, I received an e-mail from a creditor, Boeing Equity Investment Aviation Limited, headquartered in China. The company presented an appeal for our collection operation to help them recover a $300,000 commercial debt owed to them by an aircraft company with offices in Europe, Russia, Canada and the United States. The creditor offered a 15 percent commission if my agency was successful in its collection attempts. Because we’ve had some large balances placed similarly in the past by some international members, this was not particularly unusual.

I notified the new potential client that we would attempt to collect via traditional means, and if litigation were required, we would forward the account to a collection law firm. The client thanked me for accepting the claim and attached the required debtor contact information as well as PDF copies of invoices and contracts signed by the debtor company. Everything was perfectly in order. I acknowledged receipt of the documents and indicated that later that same day we would initiate an e-mail on this commercial claim and attempt phone contact. (The client was interested in a quick resolution, as cash flow was needed as soon as possible.)

A few hours later, I received an e- mail from the debtor company (before we’d even sent out our e-mail) indicating it had received word from our client that its past-due balance had been placed with us for recovery and that, being an honest firm, it would make a partial payment directly to our office within 10 to 14 days. I accepted the arrangement and provided the address to which certified funds could be sent. (We would never provide any banking information in a scenario like this!) I requested the funds be sent to my attention.

Twelve days later, my office phoned advising me that a FedEx envelope had arrived addressed to my attention from a location in Brampton, Ontario, Canada. Enclosed was a cover letter from yet another investment entity, signed by an individual with whom I had not yet communicated. She asked that we confirm receipt with her office and our client’s office immediately via e-mail. Attached was an official check, certified funds, drawn on The State Employees Credit Union of Maryland for $175,830.55.

It was all very official looking. As is our practice, we phoned the credit union to confirm the transaction. That’s when we discovered the check was fraudulent!

Having been in this business as a second-generation collector for more than 30 years, I instinctively knew the transaction had been suspect from the beginning. Those suspicions proved to be true.

The credit union’s fraud department confirmed it had experienced a number of these activities over the last two years. The credit union had been specifically targeted, though to date most of the victims had been consumers, not corporations. There was no doubt the stock paper used for the check had been stolen or obtained from an actual financial institution. We later discovered the bank check as well as the routing numbers were bogus.

This fraudulent activity poses a huge risk to ACA International members. Be very cautious. The goal of the scam is for the agency to deposit the check and then remit quickly to the client. By the time the check is discovered to be fraudulent, funds have already been deposited in the client’s account and immediately withdrawn. The collection office would suffer the loss of the entire amount, minus its fee.

The real concern for our industry is that this entire process was skillfully transacted, directed at defrauding collection agencies specifically, and could easily fool the most prudent business professional. If you encounter a scam like this, please contact ACA International at +1(952) 926-6547. cm

Harry A. Strausser III, IFCCE, MCE, is president of the Remit Corp. in Bloomsburg, Pa., and past president of ACA International. He can be reached at [email protected].

© 2009 ACA International. All Rights Reserved.
Reprinted with the express written permission of ACA International.

Posted: Thu Apr 16, 2009 2:12 am

Quote:

The client thanked me for accepting the claim and attached the required debtor contact information as well as PDF copies of invoices and contracts signed by the debtor company. Everything was perfectly in order.

that's interesting - I've never received anything from a scammer that would convince me, or my pet fish, that they were anything except scammers. these lads must have been quite good, or he's changing the story just a little to make himself sound better Wink

Baiting Guru Joined: 03 May 2007 Posts: 18313

Some of these scams are actually very well executed and way more sophisticated than your average NOK script, especially the ones we've seen targeting law firms and collection agencies.

Thank you for posting this, Diana! Very Happy

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