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October 05, 2023

Distributor Warns of Sophisticated $170K Scam Attempt

Donald McAlister says the fraud was more cunning and elaborate than others he’s encountered in his nearly 30 years in the industry.

By  Christopher Ruvo

Donald McAlister’s healthy dose of skepticism and due diligence kept him from sustaining a $170,000 loss in a brazen swindle.

Still, the fraud attempt was like nothing McAlister had previously encountered in his lifetime in the promotional products industry. It was sophisticated, he says. It was cunning. And it occurred to him that more than a few promo peers could potentially fall prey.

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That’s why the president and CEO of Georgia-headquartered distributor Targeted Promotions Group Inc. (asi/341803) felt compelled to come forward and share about his experience with the devious con artists.

“We’re a tight-knit industry that’s still made up of a lot of mom-and-pop businesses,” McAlister tells ASI Media. “I don’t want to see anyone get dragged over the coals by this.”

Been Around the Block

McAlister was born into a promo family. His parents founded the distributorship he now runs. Formally, he’s been a promo professional for nearly 30 years. But really, he points out, he’s been in the merch business since birth.

That’s all to say: McAlister has been around the block when it comes to scam attempts.

Random one-off requests for 15,000 blank T-shirts or flash drives? Yeah, you’re not going to get McAlister to bite on that.

Donald McAlister“Take the time to ask if what you’re seeing is legit and look into it. You can’t be too careful these days.” Donald McAlister, Targeted Promotions

Then there are the schemes that fall into those like the “Pidcock capers” upon which ASI Media has reported extensively. These involve a crook posing as a real buyer for an organization and trying to purchase products, often branded, for which they’ll never pay.

The frauds, which McAlister calls “second-tier” scams, are more elaborate and tricky to spot. Still, McAlister has always sniffed them out. The latest con attempt was a type of evolution of this scam – executed in a way that gave it a frighteningly good appearance of validity, at least for a time, McAlister says.

“It all,” he shares, “started with an email.”

‘Did Accounting Fill Out the Credit Application?’

Indeed, the dealings began with the purported buyer emailing McAlister to request a credit application so as to establish an “account with your company to facilitate regular purchasing of products and services. We are looking into making some purchases on promotional tech items for our upcoming event.”

The emailer identified “herself” as “Jill Cochrane,” a “senior manager” with Fairview Health Services. Fairview is an actual nonprofit integrated healthcare system in Minnesota with reportedly more than 30,000 employees. A potential big fish client, for sure.

Even so, McAlister’s scam antennas were already up. “Opportunities like that usually don’t just fall in your lap,” he says.

Nonetheless, in the digital age, McAlister has had legitimate prospects reach out to him for solutions after finding Targeted Promotions online – something that the con artist represented to be the case here, too. As such, he decided to take the step of sending the requester a credit application to fill out. What was the harm in that?

The credit application was duly returned with legitimate banks listed, as well as phone numbers and names of supposed contacts at the financial institutions, McAlister says.

Then, and this is key, there was silence for weeks. Similar to how a real buyer might act, the scammer didn’t come off as overeager. McAlister actually reached back out to see if they were still interested.

The “senior manager” responded that she’d been out of the country and apologized for not getting back sooner. She asked if “accounting” had sent over the credit application and copied in someone who was supposedly from that department, McAlister shares.

“Referencing accounting and having that other email address on there was smart on their part because it’s something that makes it seem that little bit more like this might be a real request,” McAlister says.

An Initial ‘Rejection’

Now, the wheels really started turning.

The scammer said they were interested in items for a “brand awareness event” in October. Targets were potential clients with a per-item budget of $7 to $20, and stakeholders. In a potential red flag, the emailer told McAlister that “we are open to budget and can go as high as possible regarding stakeholders.”

“We would greatly appreciate it if you could provide us with a proposal for a range of promotional technology items that align with our event theme and target audience,” the emailer wrote McAlister. “Some items we are interested in include Bluetooth speakers, office mouse, Partybox, SD memory card 16GB/32GB, power bank, headsets/earplugs, or any other creative tech gadgets you recommend.”

While leery, McAlister wasn’t yet entirely convinced this was a scam.

Not wanting to miss a big opportunity if it was real, he worked up a presentation. The “prospect” decided they wanted to go with 64GB flash drives, but told McAlister they couldn’t find something they liked for the stakeholders. The poser prospect would later say they were interested in Apple AirPods for the stakeholders, but that initial rejection was a crafty move, says McAlister.

“To be honest, the fact they rejected ideas for the stakeholders made me trust them more,” he shares.

A Dodgy Address & Full-Payment Up-Front Insistence

Eventually, things got to the point where the scammer was ready to have fulfilled what amounted to an approximately $170,000 order of flash drives and AirPods. But here, McAlister made a wise move that was pivotal to setting the con unraveling.

The fraudster said the goods should be shipped to a “chief inspection team leader” at an address in Dayton, OH – odd, since Fairview is based in Minnesota. McAlister used Google Earth to look up the address. Turned out it was a residential duplex with bars on the windows, he says.

Spidey senses tingling, so to speak, McAlister also delved deeper into the credit references provided. He called one number listed; it wasn’t working – another warning sign.

He then went online, found the number for the real corporate office of the financial institution, and called to confirm if the person listed on the credit application worked there. He says corporate affirmed that the person did, suggesting possibly that the scammers identified this person and used their name to give the scheme the look of being real.

Still, McAlister wasn’t able to get a hold of the individual at the bank. Plus, the bogus number on the credit app really had his eyes now firmly narrowing that something was amiss.

Another caution: The scammer who identified “herself” as “Jill” provided a phone number in the emails she had sent McAlister. He called that line and got a “subscriber cannot be reached” message. Through email, the fraudster tried to explain this away by again saying she was out of the country when McAlister had called, he says. The con artist continued to communicate strictly through email.

Now largely convinced he’d been in communication with a crook, McAlister told “Jill” that if the order was to be fulfilled, he would need full payment up front via ACH debit transaction. The scammer wasn’t having that; they wanted full net terms. McAlister insisted on full payment via ACH, telling the supposed buyer it was how Targeted Promotions proceeds with first-time customers.

At that point, the crook broke off communication. McAlister hasn’t heard from them since.

Even if the fraudster had sent the money, McAlister would have waited at least three days before moving on the order to ensure it had actually reached his account, as sometimes with ACH it can say the money is in the pot, but the dollars don’t actually hit for a few days, according to McAlister.

“I had a feeling the whole time that this just wasn’t right, but they did enough to make it seem like it might be a real order,” McAlister says. “If you’re inexperienced, or if you’re moving fast and just seeing a big sale, you can miss some of the signs with a scam like this. Take the time to ask if what you’re seeing is legit and look into it. You can’t be too careful these days.”