Friday, April 4, 2008

Con Artists' Standby--the Quick Way to see through the Phony Invoice Scam

--If con artists were to credit Benjamin Franklin with first pushing the phony invoice scam, it's said they would get better recognition for it.

Some scams appeal to greed (Earn $1,000 a week stuffing envelopes). Some appeal to fear (Cure cancer easy; the cure is in your cupboard). Others to vanity (Become a Cary Grant look-alike in 10 easy steps). But, this one--an ever-popular scam with con artists--plays on inattentiveness, sloppy routine office procedure, and in some cases, downright laziness. It's the phony invoice scam, around for ages, still alive and kicking.

A standby of America's mail order age, the phony invoice scam works something like this: a realistic-looking invoice is mailed to a small business. It's conveyed by way of the usual window envelope, and dressed up to look like any other invoice that businesses receive on a daily basis. It has an itemized list of services supposedly rendered, or products supposedly delivered. If the accountant or purchasing agent (whichever responsible for paying bills) were to flip to the reverse side and read through the terms--printed purposely in tiny, eye-straining type, and in dull, sleep-provoking language--they would find, near the bottom, a brief disclaimer, "This is not an invoice." Few ever get that far, because it reads like an income tax form that has been modified beyond all understanding.

If the dollar amount is small, it's so much easier to just pay the bill and have done with it. What's the rationale? Quick, no hassle, easy way? Who knows. Don't hate yourself in the morning, sleep till noon. something like that.

The con artists are fully aware of this nonchalant, gloss-over scrutiny and tailor their operations accordingly. They are also fully aware that most businesses have a "do not contest" policy--presumably for faster, more efficient internal operating procedure--wherein, if the dollar amount does not exceed a certain figure, it need not be held up for further approval, O.K.'d by another person, or investigated. The scamsters know these dollar limits usually range from "not more than $25," "not more than $100," or cut-off-for-examination points in-between.

They therefore usually take the easy way themselves and set the amount they will charge at $24 and change. Then, after mailing tens of thousands of these, they sit back and total up their returns as their business reply envelopes come flooding back with the anticipated payments. Then, it's the ca-ching, ca-ching, ca-ching ringing of their cash resisters that makes them work, as well as their frequent trips to the bank (we wonder, do you think they really laugh all the way?) to deposit their "ill-gotten gains."

As further indication of how rewarding this scam is, consider this hypothetical: Say the con artist sends out 100,000 of these "invoices," and gets but an anemic 1% return. Even that low a rate of return spells out to 1.000 suckers paying for nothing at the rate of $25 each. This would come to a quick $25,000, not bad for a day's work. In the past these schemes have yielded a return as high as 7%. We think you will agree, that $175,000 for a day's work, from a scam of this scale, would buy groceries for a while.

So many of the scam fighters today are so distracted by the more exotic forms of fraud that they largely leave this one alone. To each his own, we guess. We say, if you don't want to beat a dead horse, then don't beat a dead horse. It's as simple as that But, unless one is certifiably insane he will instantly see that this is one of the easiest problems to fix. Thus, we say, also in the "as simple as that" vein, O.K. then, fix it...


Warmer said...

I was not aware of this...but if true, if these scams can be this easy to do what chance do we have in fighting them?

Lois the Second said...

My sister got in a lot of trouble over something like this a few years ago. As accountant for a plumbing supply company she routinely approved some $17,000 worth of phony payments over five years. When they raided the premises of the con artists they found it was just a cubicle somewhere that was abandoned. I wonder how much free money they scooped off from unsuspecting companies. My sister saved her job only because she had some of her own money in the company.

Chris A said...

Sorry, but I just can't feel sorry for any business that gets suckered by this. This all comes down to just plain efficient management. This can easily be stopped.

Warren M said...

Fake invoices have been around since the year 1. It doesn't seem possible that this hasn't been stopped, dead and buried by now.

Kadamanian said...

I'll say it again, a pox on all their houses.

Jack Payne said...

Glad your sister got off the hook, Lois. Am sure this was a bitter lesson learned.

You're right, Chris and Warren. This simple scam has been around, seemingly, forever. Easy to stop, yet, for some reason, most businesses are slow to take the necessary action to do so.

Your poxiness in interesting, Kadamanian. But, who this time? the con men of the victim-businesses they fleece? You can't just pox everybody. Ain't fair.

Bern said...

I guess as long as so many companies are so sloppy in their handling of their own paperwork they deserve to be scammed. No sympathy here.