When Justin Tsou read this week about a distributor being tricked into fulfilling a $26,000 order of flash drives for a crook that never paid for the products, the details of the con felt all too familiar.

Tsou is a regional sales manager with Tomax (asi/91435). He tells ASI Media that the California-based supplier, which specializes in technology products, has frequently encountered essentially the same approach from fraudsters – either directly or through its distributor customers.

Tsou reckons the scam attempts have occurred roughly every several months over the last three years or so. Thankfully, Tomax and distributor partners have snuffed out many of the frauds before fulfilling orders and being out of money. However, it’s not always been possible to spot the fraud and some distributors have been victimized.

“Sadly, we’ve seen distributors get scammed on orders for USBs,” he says. “One distributor also did a $21,000 order of speakers for a ‘client’ that turned out to be a scammer.”

Tsou’s story highlights an unfortunate fact: There’s a consistent, concerted effort by crooks, which some industry executives believe to be an organized racket, to dupe both distributors and suppliers into providing products for which they will never pay and then sell on the black market. It’s imperative, says Tsou, that industry pros be aware of the scams and work together to prevent them.

“We have to act as partners,” Tsou says.

The Nature of the Con

ASI Media’s Sept. 7 report on a Midwest distributor that was tricked into providing $26,000 worth of flash drives is representative of how these scams often go.

The fraudster posed as Michael Pidcock, a real purchasing manager at Ohio University. Communicating from an email address doctored to look like the real Pidcock’s, the crook requested OU-branded flash drives. He had a quality logo art file, a legit-looking-but-fake purchase order, and knew the promo order process well. There were potential tells, which you can read about here, including that the criminal wanted the goods shipped to an intermodal transportation facility nowhere near Ohio University. Still, the distributor fulfilled the order. (Tomax was not involved in this order.)

Scam alert! A now common #scam snared another #promoproducts distributor. See what happened and get tips that will help you avoid being taken.
https://t.co/63HdGnEGEf

— Chris Ruvo (@ChrisR_ASI) September 7, 2023

The actual Pidcock isn’t part of the bogus queries. ASI Media has reported multiple instances of criminals exploiting his identity to advance their ploys. Tsou tells ASI Media that Tomax has encountered the Pidcock poser or posers in the course of business. “He seems to show up every six months or so, but always with an email domain that’s similar but still different to the actual university’s email,” says Tsou.

Notably, Tsou and others point out that the scammers don’t just pretend to be Pidcock. They will also posture as buyers from a variety of real organizations, including everything from various businesses and utility providers to other secondary education institutions. They spoof email addresses to look like genuine emails from the organizations in question and often request items that range from tech products like flash drives and speakers to drinkware, including tumblers and mugs.

“I can recall instances where we had suspicious inquiries from people who were saying they were buyers for Harvard and the University of Washington too,” Tsou relates.

Posing as Distributors

While the con artists have frequently targeted distributors, they’ve also put suppliers in the crosshairs. Tomax has experienced this firsthand.

Tsou says some scammers have posed as distributors and contacted Tomax with order requests. The approaches come through email to the supplier’s sales pros or through the company website. The ne’er-do-wells may even present an industry identifier, such as a random/bogus ASI number. “These aren’t always obvious to catch,” Tsou admits.

“I don’t want others to go through what we did.” A #promoproducts distributor that was recently the victim of a scam -- to the tune of more than $60K -- shares lessons learned. https://t.co/coVmrf2e9g @asicentral @ASI_MBell

— Chris Ruvo (@ChrisR_ASI) September 28, 2022

He also shares that solicitations have come from scammers posing as end-buyers. “We only work with distributors so we wouldn’t take these orders anyway,” Tsou states. “What we do, though, if it’s a legitimate request is pass the lead along to a customer. We obviously won’t do that if we suspect it’s a scammer. As suppliers, we have to pay attention and spot the signs of a scam.”

Tomax has tipped off distributor clients that the end-customer they’re dealing with may be a scammer, when the distributors have come to the supplier with fishy requests from the purported end-buyer. Tsou says orders that follow a certain pattern – a request from a supposed university for a large number of USBs to be shipped to an off-site warehouse, for instance – can raise red flags. In some such cases, Tomax has warned distributors of the potential fraud – not necessarily an easy thing to do.

“The scammers are evolving and getting smarter, so we as an industry have to evolve and get smarter too.” Justin Tsou, Tomax.

“It’s difficult as a supplier to go up to a distributor questioning the integrity and legitimacy of their customer, but there’ve been times we felt it was important to do given some of the warning signs,” Tsou says. He notes that, in instances, after alerting the distributor orders did not go forward. Whether that meant the distributor was offended and took business elsewhere, or that the tip led to the distributor realizing the order was bogus, wasn’t known.

“The scammers are evolving and getting smarter, so we as an industry have to evolve and get smarter too,” Tsou says. “I think being educated that these scams are out there and open, honest communication between suppliers and distributors about orders where there might be red flags can really benefit all of us.”