Unfortunately fraud is extremely prevalent in business credit today. One reason for this is that in this tough economy, many businesses are so eager to make the sale, that they do not perform as thorough a credit check as they should.
Another reason for an increased amount of credit fraud, is due to otherwise honest individuals “fudging” on their credit application to make sure they are extended the credit they need to keep their business running.
However, there is something that credit professionals can do to prevent this fraud. First, they can be on the alert for phony references, unsolicited orders and rush orders. Take the time to call the credit references and do not be bullied into rushing a shipment of goods. Do business on your terms!
Next, when checking those references, watch out for numerous references in the same geographical location, references that give extremely favorable reports or references that are very impressive sounding.
Most importantly, you must remember that as much as you want the sale, if the account is going to go delinquent, you are not only going to be out the money, but also your merchandise.
Take the time that is necessary to prevent credit fraud by a thorough investigation at the outset of the relationship. If the customer is giving you pressure to rush, then you just got your first warning sign of trouble. Listen!
***Disclaimer: This page has been prepared by Spiwak & Iezza, LLP for informational and educational purposes only. The content is intended to provide a general overview of the law and does not constitute specific legal advice. Viewing this page or using this site does not establish an attorney-client relationship with Spiwak & Iezza, LLP or any of its members. Additionally, because laws are subject to frequent changes, some of the information provided may no longer be current or applicable.