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Deception Losses - Voluntary Parting

As we move away from the shattered COVID economy and seek to resurrect sales, businesses need to stay focused on the risks that previously may have not have taken center stage.


During this rebuild period the sales transactions are largely virtual and businesses are reporting increased cyber deception attempts and are at a heightened risk of imposter buyers who look for pay-on-delivery, credit, and consignment.


To protect from these risks it imperative that employees not deviate from protocols when vetting buyers and suppliers, making payments, extending credit, and shipping goods. The process should be multi-step and spanning several employees including a responsible executive. Employers should maintain an improvement mentality and continuously evaluate the procedure to identify areas for refinement as deception efforts evolve.


Following is a recent release from NACD (National Association of Chemical Distributors):

I would like to bring to your attention a very important issue to ensure this situation does not happen to your company.

Recently, the association was alerted to a highly sophisticated and costly fraud incident involving a member company. The safeguards the member company used to ensure a secure process for the purchase of this product were exemplary. Yet the incident still took place because the fraud was incredibly convincing. Once the fraud was discovered, the member reached out to us for assistance. We worked closely with the member company and officials at the U.S. Department of Homeland Security (DHS) and the Federal Bureau of Investigation (FBI) to uncover details. The member was able to recover their containers of hazardous material costing nearly $750,000 but only with the FBI’s and DHS’s help.

Fraud is nothing new to our industry. As part of Responsible Distribution practices, our members vet new customers quite thoroughly. However, the process by which bad actors are incorporating new technologies allowing them to purchase products fraudulently is becoming more challenging to detect.

We are aware of at least one other case in recent weeks, and information gleaned from our conversations with law enforcement officials leads us to anticipate seeing more incidents. I want to encourage you to:

  • contact your local FBI office immediately should you suspect a case of fraud, and

  • call me after you have done so as the association is also working with the federal government to provide additional information and resources in these cases.

We also want to monitor how much this issue is impacting our industry so we may keep the broader community alerted to detect on-going fraud.



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