The Health, Beauty and Pharmacy Loss Prevention Forum has warned British retailers caught up in an international ‘trojan horse’ invoice scam worth hundreds of thousands of pounds to report the sting to police and Action Fraud in the UK.
The Forum is one of the sector specific ORIS Forums that comprise some of the biggest brands in retail and represent more than £200 billion worth of turnover and it told retailers to not respond to threatening payment demand emails from suppliers who have shipped goods to bogus addresses.
Healthcare brand Holland and Barrett is one of the Forum members that have had their identity ‘stolen’. The scammers have used H&B paperwork and ordered tens of thousands of pounds worth of nuts and olive oil that has then been shipped to the UK.
The scammers work by forging or replicating purchase orders from some of the UK’s biggest brands using convincing logo and letter-heads and even the names and email details of senior named personnel to smooth the passage of the paperwork to a number of international suppliers.
To the untrained eye, the orders look genuine and suppliers are shipping the goods to addresses in the UK.
Security manager Martin Toomey has been dealing with a number of police forces and Action Fraud after suppliers – all of whom are not regular suppliers to H&B – have demanded payment for goods not received by the health food chain. Toomey, who has also been working with the National Business Crime Solution (NBCS) which helps businesses tackle crime through centralised and collective data sharing – has acted on intelligence provided and visited a warehouse address where goods were shipped.
“I arrived at the warehouse and asked to see the manager but was then confronted by two men and a dog wanting to know why I was asking questions. I have reported this incident to the police and Action Fraud, as all retailers should, to try and build an accurate picture of illegal activity,” he said.
Toomey added: “We can identify where goods are shipped to and even arrest the carriers, but they are simply the middle men. What we want is for the intelligence to trace the masterminds behind the scams. Retailers should always report these incidents to police and Action Fraud and although this may not result in action, ‘criming it’ provides an audit trail.
“Retailers should certainly not issue payment to the suppliers for goods not received or ordered by them and refer their paperwork to the police. These are very clever people who have provided some very good fake purchase orders to obtain goods from the suppliers. In our case, they used the name of a senior member of the executive board, but the address and email details were incorrect which is why we knew it was a fake. These people are doing their homework and we all need to be on our guard.
He added: “I have spent many hours talking to international suppliers directly on the phone or by email. We have not ordered the goods and can prove this, but many are persistent and are involving their legal teams to try and secure payment. Our advice is that retailers and suppliers should be more vigilant. If they receive such an order, and it looks out of the ordinary – an incorrect or unfamiliar address or email, for example – they should contact the firm for clarification before shipping any goods. If in any doubt they should refer the matter to the police.”
Many British retailers have been similarly targeted for payment for goods not received and the Met police and the NBCS have been working with retailers to build a picture of the ‘Mr Big’ behind the scam.
Chair of the Health, Beauty and Pharmacy Forum Sarah King of Sally Beauty advised retailers to ‘report the issue and work collaboratively with police to identify trends that may be helpful to curb the activity and not to authorise payment.’
She added: “Prevention is better than cure and the suppliers must also tighten their own procedures. If they do not normally deal with our brands, they should carry out due diligence at their end to make sure the order in bona fide before making shipment and that would involve contacting the brand directly to make sure it is genuine.”