BBB Warns Businesses Of Twin Cities Purchase Order Scams

A string of fake purchase orders in the Twin Cities area has the Better Business Bureau of Minnesota and North Dakota on alert. The BBB is warning all businesses to be on the lookout for suspicious orders and have a system in place to vet vendors.

The BBB says the fraudulent business entity, Waterford Management, rented a virtual office in downtown Minneapolis for a short period of time. They proceeded to create three fictional online entities to serve as business references and also opened an account at a downtown bank.

The alleged fraudsters created an introductory packet which they sent to janitorial supply and home appliance companies around the country. It was only after third-party shipping firms picked up and drove away with merchandise ordered through the company did the businesses discover it was a scam.

Over $950,000 in losses has been reported so far.

“Based on what we’ve learned from Waterford alone, it’s clear the bad guys have raised their game in regard to business fraud,” said Susan Adams Loyd, President and CEO of BBB of Minnesota and North Dakota, in a statement. “Therefore, business owners and purchasing agents will have to raise theirs, as well.”

The BBB was also alerted by an accredited business about a suspicious large purchase order that they had received. When the business owner looked up the shipping address for a supposed tech firm in Eden Praire, they found that it was a residential address.

The order was determined to be fraudulent and had no connection to the area.

To avoid phony purchase orders, BBB advises business owners and purchasing agents to do the following:

• Watch out for unusually large orders. Scammers often target smaller businesses and place large orders, in the hopes the potential for profit overrides the better instincts of business owners. Large orders – particularly from ‘new’ customers – are often a red flag.
• Be leery of email-only solicitations – Many fraudulent operations have roots overseas. Watch out for situations where email is the only form of contact. Also, be on the lookout for misspellings and grammatical errors in solicitations you receive.
• Do your research. Visit bbb.org to research businesses looking to do business with you. Keep in mind that business identity theft is a growing issue. Fraudsters can and do impersonate legitimate businesses in the hopes of defrauding unsuspecting businesses.
• Confirm everything. If you receive an order from a potential new customer, even a business with an established track record, it’s still a good idea to verify the order directly with the company. Make sure you’re using accurate contact information, too; don’t go off of the phone number on the purchase order you’ve received.
• Make sure the references are real. In this day and age, creating fake online entities is fairly easy. When you’re doing your research, go beyond a simple phone call. Google the company seeking to do business with you as well as their references. Legitimate companies should have a digital ‘footprint.’ If you can’t find much on a given company or entity, it could mean they’re new or it could mean they’re not what they seem.
• Trust your instincts. A local business owner who received a fake purchase order recently said the size of the order raised a red flag – and the fact they weren’t asked to submit a competitive bid. In addition, BBB regularly hears from consumers and business owners who state they ‘just knew something was wrong,’ but failed to heed that instinct. If something seems off to you, pay close attention to that feeling. Contact BBB if you have concerns about an offer you’ve received by calling 800-646-6222.
• Have a process in place. When it comes to handling orders, make sure you have a reliable system in place to vet and verify those orders.