Maldem Investigations - Private Investigations agency in Ottawa



A new year brings new challenges, new opportunities, and new clients for businesses. Getting new clients is exciting (as it should be), however in today’s difficult economic times, when identity theft and credit card fraud are common, companies must be extra vigilant regarding who they do business with, since picking a wrong client (just like picking a wrong business partner) can turn out to be a costly mistake.

Identity theft and credit card fraud can cost businesses hundreds if not thousands of dollars in chargebacks. Financial institutions will usually compensate their clients who fall victims to fraud, identity theft, and unauthorized transactions, but will, in turn, try to recuperate their losses from vendors that did not take any precautions to vet their new clients to ensure their legitimacy.

Of course, it is not viable to conduct verifications for each transaction and very little can be done for simple online sales that are increasingly more popular, since those transactions are instantaneous, and the vendor has no direct interaction with the customer, making it impossible for them to see any red flags in the client’s behavior and notice any discrepancies in the paperwork.

There are, however, large purchases that still require in-person appearances to either sign a contract or pick up the physical product (such as a vehicle from a dealership or industrial equipment from the manufacturer for example). Those transactions involve direct interaction between the vendor and the customer and allow for an opportunity to evaluate the situation for any signs of wrongdoing or ill intent.

While more complex fraud schemes are hard to identify and detect; the most common ones are easy to spot since they require very little effort from the fraudster and thus, leave a lot of room for mistakes, inconsistencies, contradictions, and red flags that can be observed by a vigilant vendor (assuming, of course, that they look for any warning signs of fraud or identity theft in the first place).

There are several things merchants, can do and look for in order to quickly assess new clients and evaluate the information they receive from them. Those steps can range from simple Google searches to full-scale Due Diligence processes, but regardless of the complexity of the verifications, the purpose of such action remains the same: find inconsistencies and discrepancies that can point to potential risks.

Without spending several hours or even weeks going through a full Due Diligence process that can cost thousands of dollars for each client, there are a few quick and easy verifications that any merchant can do on the spot in order to protect themselves and reduce risks of fraud. Those simple steps consist of: 

  1. Verifying the address :

A quick Internet search of the address provided by the new client can often reveal the name of a person or a business associated with the location. If the search provides a different result from what is indicated on the client’s documents, then it should be treated as a red flag and warrant further questioning regarding the discrepancies.

In addition, if the customer’s address on their identification documents is different from the shipping address they provided on the contract or the shipping form, it can also be an indication of fraud. While it is plausible that the buyer wants to have the product delivered to a different location for a legitimate reason (ex: gift for someone else or ship to their place of business), when a new customer makes such a request, it is worth assessing the situation further and asking the customer additional questions in order to avoid any unpleasant situations down the road.

Based on the quality of their answers (ex: do they answer the questions directly and right to the point or do they tell an elaborate and needlessly complicated backstory as to why the addresses don’t match) and the manner they reply (ex: do they look nervous or get angry), a merchant can get a better feeling of the situation and decide if the information provided by the client is satisfactory enough to proceed further.

  1. Verifying the telephone number:

Similar to the address verification, running a quick Internet search for the phone number can also provide valuable information. In many instances, fraudsters use the same phone number when they conduct multiple frauds within a short period. If someone already fell victim to the fraudster in question who used the same contact information, this will likely be mentioned on one of many fraud-related forums and discussion boards.

Additionally, if the client has a legitimate business, then the business phone number they provided should appear right away in the search results and be linked to the appropriate company. If the provided number does not appear in search results or appears to be linked to a company with a different name, and even worse a totally different industry, then those red flags should definitely not be ignored.

  1. Verifying business registration:

When dealing with a commercial client, it is strongly recommended to verify business registration documents when possible, as they may reveal important clues about the true ownership of the business and indicate any recent changes to the company’s location, nature of the business, and additional partners. All those elements can be glanced at quickly and provide additional opportunities to notice any inconsistencies and red flags.

Changes within a company’s ownership before a major credit purchase are often indications of potential fraud. Similarly, a brand new company that makes a large credit purchase should always be treated with extra caution as very often new businesses are registered for the sole purpose of facilitating fraud (or other illegal activities).

  1. Paying attention to red flags:

Numerous behavioral and physical clues can be indicators of fraud. On their own, they may be explained by a legitimate reason or a simple mistake on the client’s part; however, as their numbers grow, so should the merchant’s level of caution.

When a new client:

  • Agrees to pay high prices without negotiating (as if it’s not their money)
  • Wants to send someone else to pick up the product (because they are “away” or “too busy”)
  • Tries to conclude the transaction as quickly as possible (because they are in an “extreme rush”)
  • Threatens to cancel the purchase if it’s not done quickly enough
  • Doesn’t answer questions clearly and is being vague about details
  • Tries too hard to explain their unusual situation and adds too many irrelevant details to their story
  • Uses different fonts on the same document (which could be an indication of document tempering)
  • Doesn’t fit the normal demographic and profile for the business they claim to represent
  • Misspells their own name on the contract
  • Doesn’t know their postal code right away

…the merchant should proceed with a higher level of discretion.

  1. Listening to the gut feeling:

When something just does not feel right about the client or the situation as a whole, there is likely a good reason for it. In many instances, the gut feeling is proven to be right and at the very least, when this feeling tells a vendor that something is wrong, it’s better to listen to it and take the appropriate measures and a few extra steps to protect themselves and their business.

The above-mentioned steps are simple and don’t require a lot of time or effort from the vendor. They are, however, often overlooked by merchants who want to make a sale as quickly as possible and do not want to ask their customers any questions in order not to annoy them or delay the transaction any further by conducting additional verifications to confirm the legitimacy of the information provided by the client.

Many scammers are aware of this and count on such behavior from the vendors as it facilitates their deeds.

It is important to keep in mind that there could always be a legitimate reason behind the discrepancies. However, when a new client comes in and wants to quickly make a significant purchase while providing inconsistent information, the vendor should proceed with extra caution especially when they observed numerous red flags and contradictions, and the overall situation simply does not feel right.

Private Investigators can offer valuable advice to merchants and business owners regarding different protection measures they can put in place against various scams that businesses face every day. In certain situations, especially when dealing with expensive items such as vehicles or specialized equipment, it is also possible to track down and recover the merchandise thus limiting the losses for the business even further.