Types of crime and fraud
Some of the key crime and fraud risks that exist when exporting overseas include:
Theft
Your business’ products are at risk of theft at every stage of the export process; including the shipping process and when they are conveyed by your business’ overseas resellers/distributors. You should be especially vigilant at the entry and exit points in the distribution/supply channel, where products are particularly vulnerable to the risk of theft.
Fraud
This is a broad area and includes criminal action such as:
- scams – getting money or products by deception, including identity theft and conspiracy (an agreement between two or more people to commit an offence)
- counterfeiting – copying your business’ products, usually to a lesser standard of quality, and passing them off as your business’ products.
Internet crime
Because it is easy to use the internet to conceal an identity, internet crime is often difficult to trace. It includes:
- credit card fraud – the use of stolen or fraudulent credit cards to obtain money or property. Businesses that trade online are particularly vulnerable
- spam/junk mail – unsolicited bulk email, often illegal in itself, can also be used as a medium for fraud and identity theft. Spam could be made to look like it has been sent directly from your business, damaging your business’ reputation
- information theft – computer networks can be vulnerable to hackers. If your distribution and contact lists are connected to a networked computer with Internet access they could be stolen
- online intellectual property theft – If you have original material online it can be copied and used without your knowledge or permission.
Money Laundering
This crime involves concealing the true ownership or origin of money obtained from criminal activity. Be very wary if asked to accept money on behalf of someone else and/or pass money on to someone else by wire transfer. This could involve your business in money laundering for organised crime.
Minimise the risks
Steps you can take to help minimise your exposure to crime and fraud include:
- Educate yourself on the latest scams targeted at businesses; be savvy and conscientious. Look for red flags such as unnecessarily complex transactions or unprofessional and poorly written letters or messages. Remember the golden rule – if something sounds too good to be true then it probably is.
- Thoroughly investigate all people who are employed or otherwise engaged with your business offshore. Insist on full reference and background checks.
- Check that your customers are who they say they are:
(a) Keep track of customers with good records and customers with poor records.
(b) Use an address verification system to make sure the given address is valid.
(c) Verify large or unusual orders by calling the customer directly.
(d) Be wary of customers who don’t provide all the required details.
(e) Keep track of all transaction details, including the Internet Protocol (IP) address.
- Cross check the accuracy of information received from offshore. Conduct regular audits of financial information.
- Invest in up-to-date and comprehensive antivirus and security software protection.
- Where possible, get insurance to protect your business against loss caused by crime and fraud.
- Use well-known shipping or courier companies that allow you to track your products’ journey from origin to final destination. If you are ever in doubt about the authenticity of any communication, contact the sender to verify.
- Where credit cards are used for payment, always ask for the expiration date and validation code as well as the card number. An invalid or missing detail could indicate the “customer” is using the card number of a stolen credit card. Be wary of multiple orders using different credit cards issued from the same IP address and orders charged to different cards but delivered to the same address.
Risk Management Plan
One of your business’ best defences against crime and fraud when exporting is a risk management plan. A comprehensive plan sets out ways to identify possible negative outcomes before they happen and establishes procedures to help avoid or minimise their impact.
This guide is provided subject to our terms of use:
Use of the information contained in this guide is at your own risk and we are not responsible for any adverse consequences arising out of such use. This is a complex area and we recommend that you seek legal advice before taking any related action.
