How do you spot a fraudulent business?
Rick Fryman, president and COO of TC Marketing, Inc. BB #:126889 in Napoleon, OH, is blunt: “Unfortunately, every new account that you have zero experience with is a suspect until a relationship is formed.”
In the produce world, Blue Book Services can provide a head start with its ratings system, indicating the reliability of companies within the industry. “Blue Book is collecting more information and better information than ever before (particularly the CAT table), which it provides to members,” says Amendola. Yet inevitably there will be business with companies not listed with Blue Book.
George Agorastos, sales manager for Arizona Sky Produce, Inc. BB #:269689 in Nogales, AZ, cites both the time of operation and rating as important. “Once dealing, we limit credit, and watch how fast they pay.”
One of the first things the Better Business Bureau looks at is transparency, according to Richard Copelan, president and CEO of the Better Business Bureau serving Ventura, Santa Barbara, and San Luis Obispo counties in California..
“While not always a sure-fire sign of illegitimacy,” he says, companies that don’t include an address and telephone number raise suspicion. If there’s nothing to hide, most companies will generally disclose their location.
Amendola offers these warning signs: “An application from an unusual or high-risk zip code; a shipping address that doesn’t match the company’s office location; a new customer’s first order is for high-risk or expensive products; the company doesn’t have a significant credit history; financial statements are either withheld or submitted with mistakes; company ownership has undergone suspicious changes; [and] the company asserts sizable revenue, but is unable or unwilling to prove it.”
“Conflicting information” is also a clue, according to Michelle Pancotto, credit and collection manager for Chicago-based Clipper Controlled Logistics, BB #:108797, a subsidiary of Radiant Logistics, Inc. For example, a company might claim to have been in business for a certain number of years, but “all trade information indicates a newly formed company.”
Agorastos offers a tip: buyers may not be legitimate “if they don’t complain about the prices. Anyone who doesn’t complain about the price either has too much money for their sense,” he notes, or is up to something dishonest.
Appearance counts too, Copelan says.
“A good, legitimate business is careful about how [its] website appears and functions. It’s kind of funny, really, how illegitimate companies will have their website, emails, and other forms of communications littered with misspellings and poor grammar. You’d think if someone is trying to fool you, they’d be more careful, but so many are trying to make a quick buck, then get out; they often don’t bother to look as professional as they could.
“With all of the resources available to people today, there should be a vast amount of information available on the internet about a company and its principals,” Copelan goes on to say.
Payment methods offer clues as well. “Any business that asks you to submit payment through an unsecure website is highly suspicious,” Copelan stresses, “as are requests for payment in the form of cashier’s checks, money orders, and so forth.”
In addition, “requiring at least a two-party validation process would be extremely helpful,” notes Copelan. “We also recommend that company personnel involved in purchasing regularly check the BBB’s Scam Tracker to see what types of scams are currently being reported in their area. The website can be found at https://www.bbb.org/scamtracker/us.”
This is a multi-part feature adapted from a Credit & Finance article in the May/June 2020 issue of Produce Blueprints.
