shu-fraud-untrustworthy-595931750-jesterpop-1500x1000Has your business ever encountered the customer that appears too good to be true?

Take this common scenario – you are in a business that regularly supplies customers with goods. You have a new customer and when placing the first order that customer offers to pay upfront, almost immediately and even perhaps before being invoiced. That’s a customer any business would like, right?

In a way, yes, but this kind of customer can end up being the customer that has a plan to lure you into a false sense of trust, to drop your guard, and then to exploit you.

What can, and all too often does, happen with these kinds of customers is that they follow a pattern – they are the dream customer who always pays immediately for a number of orders. Gradually, the orders become bigger and bigger and they continue to be right on the money, literally.

Then, all of a sudden, a few particularly large orders are placed and that’s when the customer turns – they either place one very big order or they ask for short term credit – the goods are delivered and no money is paid. They either disappear or, if they are operating via a corporate entity, their company ceases to trade and your business is left without payment. In this case, you have most likely been duped, lulled into a false sense of security and taken advantage of because you didn’t carry out any credit checks or corporate checks before doing business. And if your business sells abroad or has high value orders, you probably didn’t conduct any business background checks.

Most unethical or fraudulent activity is fundamentally based on psychology and human nature – humans want to trust other humans and to be liked. When we feel we can trust someone, we can all too easily drop our guard, and that’s when the fraudster will pounce, taking advantage of human nature. The above scenario is exactly the modus operandi used by Bernie Madoff and other Ponzi scheme fraudsters. You put money into their scheme and they initially pay out like clockwork, doing exactly what they say they will do, until, bang, one day, it all stops. Because everything seemed to be good, investors increasingly didn’t bother conducting checks on Madoff or what was really happening. Madoff reached a position where he was trusted by default, that’s the key point.

So how can you prevent this?

The only way to avoid situations such as the above from occurring is to ensure that you have the right policies and procedures in place and are rigidly consistent in applying them. No matter how big or lucrative a new customer or client may be, no matter whether they pay you on time every time for a consistent period of time, this should not defer you from conducting preventative checks and processes. Better still is to perform a check on all new customers and clients for any warning signs, because, as the old adage goes, past performance is the best indicator of future performance.

What can Blackhawk do to help?

At Blackhawk, we have had much experience with conducting due diligence investigations. These investigations allow us to determine whether or not a client or customer is trustworthy based on their past performance. With this information, you can make an informed decision about doing business with them, thereby reducing your risk of being duped by a fraudulent client.

For more information on how Blackhawk can help prevent you from doing business with the wrong client, call us today on 020 7788 8983.

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