Fraud has always been prevalent in the leasing industry. However, it’s numbers are increasing now that more applications are being generated electronically. The Internet has allowed us to better serve our customers, but it has also opened us up to new scams. While the internet makes it easier for your customers to reach you, it also gives people intent on committing fraud more access to their targets. Fraud is more prevalent when the perpetrator has the ability to find you. It is much less common when you are dealing with lessees and vendors that you have approached. The internet makes it easier for people you wouldn't’t have targeted to find you.
As a Lessor you need to know what to look out for when getting an application from your web site, or from getting an application from a vendor you’ve never dealt with before.
The credit department at Marlin Leasing Corp. identified five fraudulent applications in the past 90 days all originated by one Broker. That Broker was accepting applications on their web site, and forwarding them to a funding source. Fortunately for everyone, the phony applications were all discovered during the credit investigation process. Here are the top eleven things to look for when an application is questionable:
1. Self Created D&B.
2. Hugh cluster of UCC’s filed all at once.
3. Excessive Inquiries in a short time frame.
4. Split Deals not indicated as such.
These top four all indicate someone setting up an artificial business. They quickly scam as many financial institutions as possible in a short amount of time. Then they shut down and move on, and do it again.
5. Fraudulent Financials
v Too good to be true
v No cover sheet from an accounting firm
v Numbers don’t add up
6. Sale Leasebacks with unverifiable or sketchy information.
7. Address for vendors and lessees that are located very closely to one another.
8. “Employment’s” listed on CBR’s. You may find a previous business owned by the principal that has a negative history and it’s hidden by the name changing.
9. Large well known companies.
v Many frauds have been committed by using the names of “large companies” i.e. IBM or UNIX. Do not assume that you have a true branch or location. Always confirm with the corporate headquarters that this is a true part of the organization.
10. Customers that are in an unreasonable rush.
v Our business is centered around speed, so you have to expect some pressure. The trick then is to determine when the pressure seems unrealistic for the situation.
v Attack! The vendor is much too aggressive and makes strong demands.
11. Cashier’s Checks. This form of advance rental payment should always be questioned
Progress, growth and change are all part of the leasing industry. So we have to move forward, and continue using the Internet to increase volume. Some of the safe ways to do this are:
v Secured Access. Have key vendors enter applications on line with password protection.
v Make sure there is an audit trail you can follow back to the first party involved.
If you have any other tips you’d like to share with the leasing community please e-mail me at linda@lindakester.com.
Linda Kester is the founder of the Institute for Personal Development. A sales education firm that specializes in the equipment leasing industry. Linda started her career selling copiers door-to door. Since then she has accumulated over twelve years of leasing experience, working for Advanta Leasing, Marlin Leasing, and consulting with various other firms.