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August 26, 2024

Office Supply Fraud Is Sneaky but Preventable

Office supply scams are a tricky type of vendor fraud that generally use behavioral psychology and often depend on poor intraoffice communications for their "success." Although they may not result in substantial financial losses for defrauded companies, falsified invoices can add up to thousands of dollars. Fortunately, you can help prevent them.

How scams are perpetrated

Office supply schemes typically start as telemarketing fraud, with someone calling your business to get your street address and an employee's name. Callers may:

  • Ask for the "person in charge,"
  • Claim to need information to complete an order, or
  • Pretend to verify an office machine's serial number.

The goal is to get a name to legitimize bogus shipments and invoices. For example, a supplier might ship boxes of poor-quality gel pens and send you a pricey invoice a week or two later. The delay is intentional: The fraudster hopes you won't notice that the final price is much higher than you'd pay for better-quality products. The scam perpetrator also hopes you or your employees have used some of the pens and will feel obligated to pay for them.

Some pretenders offer to send a promotional item, such as a coffee cup. Before they hang up, however, they may mention in passing that they will include some printer ink cartridges with the free coffee mug. Fraudsters don't disclose that they'll also add a bill for the ink — and expect you to pay it.

Watch out, too, for the popular "gift horse" scam. Here, a perpetrator sends a promotional item to one of your employees and follows up by sending unordered merchandise to you. You question the employee when you receive the bill with the employee's name. The scammer hopes the employee will be so nervous about accepting the promotional item that you'll believe the worker mistakenly ordered the merchandise.

It takes a team effort

Keeping your business safe from office supply fraud requires a team effort. Instruct all employees to transfer telemarketing calls to one or two designated buyers. Provide those buyers with formal procedures for documenting and approving purchases. They should also have a system for generating purchase orders or internal reference numbers. Designated buyers must instruct vendors to include those numbers on their shipment documents.

When you receive merchandise, your receiving department should inspect it to ensure you ordered it and that the packing list matches the box's contents. Then, ensure that the end receiver in your office looks closely at the contents to verify their quality and quantity. If everything's in order, your receiving department should send a copy of the bill of lading to accounts payable for reconciliation with the order.

Treat it like a gift.

It's important to know the law in these circumstances. Your business isn't required to pay for any shipment you didn't order. You may treat the unordered merchandise as a gift and are entitled to keep it without paying. If vendors claim otherwise and try to collect on their invoices, you may need to involve your legal counsel. For more information about avoiding fraud, contact us.

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1400 N Providence Road
Rosetree Building 2, Suite 2000E
Media, PA 19063

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