There are businesses (many open for decades) who steal from other businesses on a regular basis. Their formula is simple and happens in every industry and product. (TWR) involves a business or individual maintaining three good credit references plus a good reference from a shipping company. The references may be unaware that they are part of a scam or may utilize the scammer as a reference too, giving reciprocity to fellow scammers.

The process is simple: Apply for terms with a business always requesting shipping cost included into the price or a referral to a local shipper where credit is also requested. An order is placed for a small amount of product paid for promptly followed by more orders with the volume & value of material escalating over time. Then the scam kicks in with multiple orders placed over a few weeks. By the time the first order becomes past due it just creates a past due statement & the entire scope is not noticed until 90 days has passed when scammer is no longer returning communications, lakes excuses or begins to claim the material or product was “off-spec”/ defective and therefore owe nothing.

This scam can be used to acquire equipment, rent space, obtain credit and cash.

(TWR) scammers are careful to maintain perfect accounts with 3 (unknowing ?) references and at least one shipper. The shipper is important to move product from unsuspecting sellers when local shippers cannot be found and ship product to downstream customers who will not pay their own freight up front.

(TWR) scammers also defraud their own customers (after building up trust) for example shipping containers of high value scrap to China or India then beginning to dilute or hide off-spec or filler material in future loads. One of these methods involves filling Gaylords half full with worthless or highly contaminated plastics then top filling with higher grade product. Of course the (TWR) scammer requires payment in advance (never extending credit) utilizing their three references as customer references rather than vendor references. The complaints of these foreign buyers also can be used as (proof) that a scammed vendor did indeed provide off-spec product. At this point he (TWR) scammer claims to be “just a broker” and “had no idea “…..

The targets of (TWR) scammers is usually a smaller independent company who cannot afford litigation or the cost of collection procedures. The scammers also keep their bank accounts dry since they know at some point a judgement will make it through and funds could be removed. Keeping multiple bank accounts under other SSN # and tax numbers with relatives or trusted friends.

For defence (TWR) scammers will aggressively defend themselves against selected targets. A likley target is- (1) about to go under (possibly do to the scam), (2) several states away and (3) begins to complain on message boards and call the three trade references basically seeking others victims or just for-warning others. The (TWR) will sue in local courts trusting that the target cannot afford legal representation or travel. This will result in a “default judgement” granting the scammer damages & most importantly a “gag order” specifically preventing the target from ever speaking out or warning others. This also becomes a public record creating fear among others who may try to seek redress or at least communicate with other business in attempting to stop future scams.

The smartest of these scammers maintain years of perfect business relationships with their references (if not part of the ring) and many large companies t keep their amount of scammed profits “below the radar”. The most sophisticated buy across state lines and keep the scam below $9,000.00 this tactic keeps law enforcement checked as local authorities say it is a Federal issue since state lines were crossed and Federal authorities will not look at cases under $10k unless there was clear wire fraud involving the postal service or an interstate bank.

How to defend against this scam ?

1- Do the trade references actually exist ? google maps and street-view works great in-depth searching of the web with multiple phrases including the business name, owner name and with addition of the phrase “vs” or the word court.

2- Watching new client activity and account ageing very closely, upward curves should trigger a visit to the new customer. A good practice any way should they become a large legitimate customer they will appreciate your interest and you WANT to help them succeed !

3- message boards and industry specific message boards.

4- Require proof of insurance and workers comp verification.

5- Search court records if volume increases and higher credit is requested.

These are just highlights, I am sure you can and will find many more.

Brett Bringardner