The Midwest-based distributorship had good reason to believe the order was legitimate.

Ultimately, though, the request for JBL soundbars proved to be a scam that cost the firm more than $60,000.

Now, the distributorship’s top executive wants to share details of the case and lessons learned to help fellow distributors in the promo products market to keep from getting conned. “I don’t want others in our industry to go through what did,” the executive tells ASI Media.

A Racket Aimed at Promo

The advice may well prove timely. There’s mounting evidence that organized racketeers are aggressively coming after promo distributors in attempts to trick the firms into providing sizeable quantities of products – from speakers to drinkware – that will never be paid for. The criminals sell the goods on the black market.

Folks, even if you're very seasoned at spotting scams, these criminals are getting more organized and strategic. Get the details on recent cons aimed at #promoproducts firms so you can ensure you won't get schemed. https://t.co/dZEpIfW3Gf

— Chris Ruvo (@ChrisR_ASI) September 23, 2022

After reporting on multiple frauds last week, ASI Media received additional reports of scam attempts from distributors, suggesting the con efforts are widespread. “These are not isolated fraud attempts,” Peter Hirsch, president of Top 40 supplier Hirsch Gift (asi/61005), explains. “They must be trying to hit a lot of others in our industry.”

Quick Facts of the Midwest Distributor’s Case

Over the summer, a crook posing as an actual real-life employee/buyer for a Florida utility company contacted the distributorship through email with a request for branded JBL speakers. The promo company had little reason to suspect fraud: After all, a well-known business colleague had started working at the utility company recently, and the firm had been in preliminary discussions about potential projects. “Given that connection, it made sense that they’d be in communication with us,” the executive says.

The deal progressed through approvals, and the scammer asked the products to be shipped to the real utility company’s address. But after the distributor provided shipping information, the criminals used the details to contact FedEx and instruct the delivery provider that they would send a truck to get the products. That they did, making off without paying. There’s no evidence anyone at the real utility company had anything to do with the fraud.

Lessons Learned

Pay Extremely Close Attention to Email Addresses: In this case, the fraudster emailed from an address that closely mimicked the one of the real utility employee. However, it had a different top-level domain (the “.com” or “.org” or whatever at the end). “It wasn’t the exact email address,” the distributor executive further shares. “It was more of an email address that was meant to look like it could’ve been created for a specific project or department at the organization.”

When getting requests from new prospects, it would be wise to confirm they’re a real person that works at the organization they say they represent. Consider doing this by contacting a company official to confirm the person’s employment and email address. You can also consider looking up the person and their actual email address on a valid source, such as a company website, and contacting them through that address in a separate email chain and/or calling the legitimate employee, using the real number for the business, to make sure it was them that has contacted you.

Notably, if a preexisting client starts emailing you from a new address, that should raise alarm bells. Email/call them at the address/phone number you already had to see if they’ve changed the information.

Also, looking up email addresses/domain names online may sometimes show they’re not associated with a company – a worthwhile step.

Check Credit References. In another sign of growing sophistication, the criminals provided supposed credit references to further give the appearance of authenticity. The distributor executive admits these references were not gone over with a fine-tooth comb. “When dealing with new clients, or when large requests come in, we’re going to dig into the details of the credit references,” the company leader says.

SCAM! The Pidcock caper is afoot again: A con artist posing as Michael Pidcock, a real purchasing manager at Ohio University, is once more trying to dupe distributors in the promotional products industry. A distributor shared their experience here: https://t.co/XznnIczCzO

— Chris Ruvo (@ChrisR_ASI) September 19, 2022

Fraudsters Are Now Requesting Branded Products Too. The distributor executive says a request for a large quantity of blank technology products like soundbars would’ve got the red flags flapping. It’s known in the industry that hucksters have often tried to hoodwink promo distributors into providing blanks because they’re easier to sell illicitly. However, the request for branded items added to the veneer of validity in the order involving the Midwest distributor, the firm’s leader says.

Still, as the company learned, racketeers are now routinely asking for branded products, too – as evidenced by this scam and multiple other recently reported cases. In the scam that snared the Midwest distributor, the crooks even provided what seemed like correct vector art. Bottom line: Just because a supposed client is requesting branded products and has art in a proper format, it doesn’t mean the order is legit.

Do Your Due Diligence on Purchase Orders. The Midwest distributor received what appeared to be a valid purchase order from the scammers. The document had multiple sign-offs from people who supposedly worked at the utility. Even so, a more rigorous examination may have indicated a fraud was in play. For instance, the person the goods were being shipped to wasn’t someone who worked for the utility company.

To avoid getting conned, first confirm anyone named on the order actually works for the company. If they don’t, the hair on the back of your neck should stand up and show you that this might be a scam. If they do, contact the people named on the purchase order directly through their valid email address/phone number to confirm they’ve signed on this order. If you’ve worked with a client in the past, compare the current purchase order to previous ones. If there are inconsistences/differences, it could be a sign a scam is afoot.

Email-Only Communication Makes It Easier for Scammers. Some of these scammers are quite savvy. Since so much communication and relationship-building is digital these days, it’s easier for them to create the illusion of being a real buyer. For instance: They’re better versed in making small talk in conversational English through email, asking about how your weekend was and sharing about theirs. Just because someone seems nice and makes chit-chat, it doesn’t mean they’re a legit buyer.  

Ensure Your Insurance Really Protects. Sadly, the Midwest distributor is probably out the more than $60,000 it paid the supplier to produce the order for the scammers. The insurance company says, in part, that because the goods weren’t stolen from a warehouse, the particular coverage the distributorship had at the time doesn’t apply to this swindle. The insurance company isn’t planning a payout. “We’re now adding additional coverage,” the distributor executive says. “Make sure you have the insurance you need to cover you in the event of a crime like this.”