Every day it seems someone comes up with a new scam or fraud idea. The most popular are the Nigerian Check fraud and the Mystery Shopper scans, all involve a useless check. These people target business that typically cash checks such as a liquor store, grocery store, convenience stores, Money Gram stores, etc. The Nigerian check and the Mystery shopper are the two favorites of crooks, here is how they work.
The Mystery Shopper scam works something like this. The crook will receive a check in the mail that ranges from $1,500 to $3,000. They go to a business (similar to one I mentioned above) to cash the check. When questioned, they tell the retailer that they are part of mystery shopper test to evaluate the retailer’s service. The check is cashed, and the "customer" gives the employee a small amount as payment for doing such a good job, he tells the clerk the money is to be used for the business or to give to their favorite charity.
The retailer deposits the check only to find out that it is worthless. Don’t even think about trying to find this person, because the ID he or she presented to you, or your employee, is fake too. Sometimes the person presenting the check is not a crook but someone who thinks they are doing a legitimate job. Many who are unemployed jump at the chance to make a few extra dollars. These people will present their real drivers license or other form of ID, but again, there is little the law can do since there is no criminal intent on the part of the honest person presenting the check.
The Nigerian check fraud is similar, the crook will present the check at a retail store or, more often, purchase something on line. They will send a check for as much as $1,000 to $2,000 more than the cost of the item. You are asked to cash the check, take out the amount of the merchandise and a couple hundred for your trouble, and then ask you to send them a money order or a cashier’s check in the remaining amount. Their sob story is their funds are tied up in a foreign company, and they desperately need this money for a sick child or elderly relative left in the foreign country.
Now, how do you avoid becoming a victim?
If you don’t have means to verify that the check is good at the time it is presented take these precautionary steps, especially if you don’t know the customer:
- If the check is over $500, take extra steps to verify its authenticity.
- Ask to see two forms of ID, at least one of them should have a photo.
- Ask to see the envelope the check came in. If it is from a foreign country (including Canada, Nigeria, and Mexico) that is a warning to be extra careful.
- Ask the customer to wait while you call the company to verify the check. The chances are, if this is a scam, the customer will make an excuse and hastily leave your store.
- Make sure you post a note for your employees describing the person and the check, often the scam artist will return when a new shift is on duty.
- If it is for a purchase over the Internet or through the mail, tear it up. You are all smart business professionals that know if something sounds too good to be true, it probably is.
These checks look real, often being "drawn" on a large well known bank such as Wells Fargo or Bank of America. This is done, naturally, to lure the merchant in to a false sense of security.
Another type of fraud comes from within the business. This is employee credit card skimmers.Credit card skimming is a rapidly growing type of fraud that victimizes the customer and the merchant. Here is how it works.
The cardholder pays for services or merchandise with his/her credit card. The employee will swipe the card through a small, illegal card reader called a "skimmer" before running it through your legal machine. The skimmer reads the data encoded on the card’s magnetic stripe, then this information is used to manufacture counterfeit cards.
This type of fraud can be very costly to your business in the form of hefty fines if the security of your credit card terminal is compromised. In addition, your business may face exclusion from the system, which is disastrous especially for a business where paying with a credit card is the normal form of payment, such as a restaurant or retail shop.
How can you protect yourself?
Ensure the security of your credit card terminals by checking them regularly. Pay attention to what your employees are doing when completing a transaction. Many businesses have cameras installed particularly in the area where the card terminals and cash registers are located. If you have a camera system in place, make sure it is aimed in the right direction and is working properly.
By remembering how these frauds work, and taking the necessary precautions, you can protect yourself and your small business.
Copyright © 2010 Sandy Glover
