Credit cards don't always guarantee payment.(Required Reading)

Credit card sales may provide a convenient way to transact business and quickly receive the cash for goods or services. However, some credit card purchases can lead to products or services leaving your business but no cash coming in. A recent case of alleged credit card fraud through the use of stolen identities illustrates this. This case, which has so far resulted in four arrests, also points out some things vendors should be watching out for with credit card transactions to help ensure they too are not victims of such schemes.

This particular case came to the attention of Gary Weishaar, director of NACM's Asset Protection Group, when he received a phone call from an APG member in late December. The member is a distributor of office supplies and products headquartered in Connecticut. Weishaar said the caller told him he received an unsolicited e-mail for an order of printer cartridges. Fortunately, the APG member scrutinized the information on the credit application and discovered that the names associated with the three credit card numbers listed on it did not match the name of the purchaser. "After they identified this substantial red flag, they called the APG office requesting assistance," Weishaar said.

Weishaar, who served as a state investigator of white-collar crime in Baltimore, MD, and is a Certified Fraud Examiner and a Fraud Law Specialist, then called federal law enforcement officials to find out if they were investigating any cases that matched this kind of apparent fraud scheme. "We received a confirmation from the U.S. Postal Inspection Service." Weishaar also sent out a fraud alert to members of APG containing the alleged bogus names and credit card numbers. He requested any members who were apparent victims of this type of fraud scheme to contact his office.

The member also provided Weishaar and the U.S. Postal Inspectors (who are the law enforcement arm of the U.S. Postal Service) with information about where the printer cartridges were to be delivered. "We staged a delivery at those locations, where the orders were actually shipped to the Postal Inspection Service." From there Weishaar noted that Postal Inspectors assigned a tracking number to the shipments, which could also be used by the perpetrator of the alleged fraud to track the shipments' progress.

The Postal Inspectors then conducted what Weishaar said was a "controlled delivery"--that is, documented to the point of the person who actually receives the shipment. "That tracking number is for evidentiary purposes to prosecute these individuals. The chain of delivery began with the member." Although the member uses other delivery services such as UPS, the perpetrators were told that because of the ...