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Export Product Order Fraud

   The following story took place just this past month and it is one that Tim Gase felt he should pass along with the hope that no one else might get burned by this scam. 

The sequence of events:

January 10, 2007

  We received an email that came into our general sales department mailbox.  The person had found our website and had questions about the products that we show on the web site.  Peerless Saw is a custom saw manufacturer but we also have some standard products that are stock items.  These items are listed on our website.
    One of our inside sales reps responded to the questions and after several emails back and forth we quoted the person pricing on several items.  In total, approximately $15,000 in product. 
     The person we were quoting claimed they were a purchasing representative for a group of businesses located in Africa.  They gave us a billing address in Texas and the product was to be shipped to Nigeria.

January 12, 2007

    The pricing looked good to the potential customer and they now wanted to know how much the shipping costs were going to be so that they would know the total cost.  So we found out the shipping costs and again emailed the information back to them. 

January 15, 2007

    The next hurdle was delivery.  The customer was wanting to have all the product shipped right away.  As it turned out we did not have all of the stock saws available to ship from stock.  We were quoting 3 weeks to have all of the product shipped.  They claimed that this was too long.  So we suggested that we could ship what we had in stock right away and the remaining portion of the order in 3 weeks.  They thought this would work.  We had approximately $4,500 of the product ready to ship.

January 18, 2007

     The next issue became method of payment.  They initially told us we could send the billing to the billing address in Texas.  We were not comfortable billing it since it was going oversees and we had no prior relationship with this customer.  We asked for references, which they supplied (a bank in Texas and several business in Nigeria, which of course we could not verify). 

January 18, 2007

    The customer asked if we would accept credit card payment, which we typically do.   So she provided us with 8 different credit card numbers.  Several of which were supposedly in her name and several others in the name of another individual who supposedly worked with her.

January 19, 2007

     Our accounting department verified that the credit card numbers were good, which they were. 

      We agreed to ship the first order of product on the condition that we would be billing the credit card prior to shipping.  We have done this with other customers who have had payment issues with us in the past.  They agreed.  The credit card information cleared, the money was in our account and we put the shipment together.

January 22, 2007

    The product was picked up and shipped to Nigeria.  The customer emailed and asked that we send the paid invoice to the Texas office.

January 25, 2007

    More requests for quote were coming in.  Small quantities of items that they had hoped we could custom make and ship with the other stock items which we were making to complete the prior order.  They were also continuing to have us track the projected delivery date of the order that had just shipped.

January 27, 2007

     More requests coming on other products we purchase for resale, band saw blades.  Several emails were exchanged to try to nail down the exact specifications needed.

February 1, 2007

     We received the letter with the paid invoice back in our mail stating “not delivered as addresses unable to forward”.  We verified the address was correct as on the email.

February 7, 2007

     We received a call this day from an attorney in California who claimed that he had a charge on his latest credit card statement from Peerless Saw Company.  He assumed that we must have entered a number wrong when entering the credit card number and asked to have the charge removed from his card.  Our AR clerk was on vacation this day, so we agreed to call the attorney back the following day.

February 8, 2007

    We double checked and there was no mistake, the credit card number matched the one we received from the customer in Nigeria.   We contacted the attorney and told him there had been no mistake and that we were suspecting fraud.
      We contacted our credit card processing bank and they gave us the number for security at Wells Fargo bank.  We called them and left a detailed message of what had happened.  It took several days before they ever called back.
       We then contacted the secret service and explained the whole story to them.  They too suspected fraud/credit card theft.  We read the credit card numbers off to the SS agent and he could tell they were all Wells Fargo bank numbers.  He suspected that the people in Nigeria had either purchased the stolen list of credit card numbers from some other internet scam or that they somehow used a credit card generator that was able to reproduce the same algorithms the banks use to create unique credit card numbers. 
      The SS agent asked us to make copies of all the email contacts and detail a letter of the sequence of events and send the information to them. 
     The SS agent also explained that the Nigerian government has been of no help in cracking down on this type of fraud.  The SS actually had an office in Nigeria to help and try to crack down on the fraud coming from this country but were able to receive very little if any help from the government there, so they shut the office down.
      We tried to stop shipment of the first order from reaching its final destination but found out it had picked up at the airport the day before.  Fortunately, the second shipment did not ship.  It was due out the next day.  We are also fortunate that the product is stock items that will eventually sell.
      We also called the attorney and suggested he contact his credit card company’s security department and let them know what has happened.  We did credit his account.

Some final observations:

1)      It is obvious now that the reason that they wanted to have everything ship so fast was because it would have given us less time to find out the fact that the charges were going to an unauthorized account.

2)       This could have been a shipment going anywhere in the world it did not have to be something to Nigeria.  Point being be aware of any new accounts that you do not know who want to charge purchases on credit card.

Thanks to Tim Gase for sharing this story.  Be careful out there!