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Paramont EO’s Director of Accounts Receivable, Norm Cowie (CCE), is a regular contributor to the National Association of Credit Management (NACM) organization and writes a column called “Illinois Construction Stuff and Stuff” for their periodical. As an author and active member of the group, Norm has helped formulate and re-write Illinois lien laws and networks with other credit professionals to share best practices with his peers and also with our clients. Whether he is raising a red flag to warn our team and other distributors about fraudulent activity or coaching a contractor on how to word a contract to protect their business, he always adds wit and humor to his extremely instructive, incredibly helpful advice. Below is an excerpt from a piece Norm wrote for NACM on scams targeting contractors and manufacturers, as well as distributors. Feel free to reach out to Norm for credit advice by emailing him at [email protected]

Illinois Construction Stuff and Stuff

Norm Cowie, CCE

Warning: None of the names in this story have been changed to protect anybody, because, well, the names were fake to start with – except the name of the firm, which is a real company, so I used a fake name for them, even though they did nothing wrong.

As we all know, scam artists are always looking for ways and means to pocket your money. One of the fastest areas of growth for these crooks is to pose as a legitimate company. Here’s one such story.

The following email was forwarded to me from our general email address:

Subject Net terms !

Dear Sales,

Our company board member have decided to make a purchase for some items in your store, Kindly get back with your company credit application form for Net30 Terms

Looking forward to read from you. Have a productive day ahead

☺

GLEN CHITWOOD

FAKE NAME ELECTRICAL CONTRACTORS, INC

Okay, yeah, maybe it wasn’t the most grammatically-correct missive I’d ever received, but if I judged the writers of emails by the language of every email I receive, our top salesman would look pretty bad. Plus, this Glen guy added the happy face, so he’s obviously friendly.

I quickly sent him a credit application and went back to drinking decaf and doing credit manager stuff. Then, not long after, I received this:

Dear Norm,

Please find the credit application form filled in your attach file plus our company W9 form.

Kindly see to these and get back soon with the credit approval.

Looking forward to do business with you.

Again, not very well phrased, but like I said, other people I know have sent me some hideously phrased emails in the past, so I’ve learned not to judge.

Before sending it to my assistant to start faxing the credit references, I looked at the application and a few things jumped out. The application was nicely, no, not nicely, extremely neat and tidy, beautifully typed with artistic electronic checkmarks in some of the boxes and a signed guaranty by their principal. They claimed to be a $17M electrical contractor located near St. Louis and were asking for an $85,000 limit. They also sent a W-9, which made no sense since they would be paying us, not vice-versa.

My Credit Manager Warning Flags suddenly ruffled, and I looked closer to see what had gotten them so excited.

Ah, there it was, the first anomaly. They listed three credit references, but none were electrical distributors. You’d think a $17M electrical contractor would have at least one of our competitors as a reference.

I frowned and looked more carefully at Glen’s email address, and noticed something else. His email address was glen.chitwood@fakenameselectrical. com. There was an ‘s’ after the name of the company that seemingly didn’t belong there. Anomaly #2.

Now I was pretty sure it was a fake, so I got on the Illinois Corporate Directory and confirmed the company existed.

It did, so I Googled the company. Not to my surprise, it had a different phone number than was on the application, though the area codes matched. I called the number from the Internet.
“Hi,” I said to the woman who answered. “I’m just calling to confirm that a credit application we received actually came from your firm.”
I heard a big sigh. “Oh, no, not another one,” she said in an exasperated tone.
“Oh, so I’m not the first?”
She blew out more air. “No, we’ve been getting calls and invoices nearly every day.”
So, it was a fake application from some jerk trying to screw us over. I thought about simply sending a denial letter, but then my funny bone piped up, “Mess with him,” it said.
“Huh?”
“Mess with him. Make him think you’re going to approve it. Waste his time and then just dump on him.”
I thought for a moment, and grinned. “You’re on, dude.” I emailed the application to my assistant and called her explaining the fraud and how I planned to toy with the guy. She loved the idea because she hates scam- artists, too.
It would have been nice to set up a sting with law officials, but I knew from past experience they wouldn’t bother to chase down this kind of white-collar crime. I would have to get my petty revenge another way and it started with Kelli sending faxes to the three references listed on the form. Without bothering to check, I suspected the companies existed in real life, but I also suspected the fax numbers actually were routed to the scamster. Their scam was sophisticated enough they had the area codes correct.
Not to my surprise, the next day we received all of the references back without us having to send any second requests (anomaly #3 if you’re keeping count). And get this, all three were very nicely typed with credit limits of $100k, $85k and $65k and DSOs of 29, 30 and 29. I couldn’t remember the last time, much less any time I responded to a credit reference by typing my response on the reference form. All three of these were beautifully formatted, and I grinned when I thought how much time they wasted to type these.

Then I received this email:
Dear Norman,
How are you doing today, Well we will like to know if there’s any good news regarding the credit approval.
Kindly see to these and get back as soon as possible. Thanks
GLEN CHITWOOD

Of course, he knew we received all of the references. It was time to mess with his head a bit, so I sent this:
Hi Glen,
Thank you for your interest.
We are processing your application and I know at least one reference responded and we pulled the D&B report as well. It’s looking good so far.
In the meantime, there were a couple items we still would appreciate receiving. While you guaranteed the account, you did not give your social security number so we can pull a credit report. Would you please forward this? If you have concerns about the safety of the number we have precaution protocols to protect your credit.
Also, for the line you are requesting, we ask that you provide financials. They don’t have to be audited, you can just send a balance sheet.
Best, Norm
It only took two hours for him to respond, and he sent the following email with part of what I asked for, a wonderfully type-written Financial Statement for the year-ending December 31, 2020:

Norm,
Sound good and thank for the great news, Please find the financial file in your attachment and let me know when the approval availability
PRODUCT: Klein Tools – CL800 Meter
PRODUCT: Klein Tools CL700 Meter
Kindly see to these and get back soon with the quotation, Once you have us approve then i can be able to forward you with our official purchase order. Thanks

Maybe he didn’t expect me to compare the application to the financials, but the financials showed yearly sales of $1.48M while the application showed $17M. And he didn’t send a Social Security number, so it was time to ruffle his feathers again. I sent a short email saying, “Thank you. I’m not seeing the Social Security number?”
After an hour, he sends this:
Norm, Please find the SSN # below #721-07-4426
Thanks

To which I responded:
Hi, Glen,
Thanks for your quick replies. A couple discrepancies came up, so I’m asking for more information.
First, on your application, you show your yearly sales are $17million, yet on your financials for the year ending 2020 it shows sales were $1.4 million. Please explain the discrepancy.
Also, Social Security numbers beginning with 721 were issued to the Railroad Board and the practice was discontinued in 1963. Are you sure about this number?
Otherwise, I think we have everything else back we need.
Best,

Five hours later he hadn’t responded, so I guessed he’d figured out I was baiting him. I figured that was it, and it was time to move on to what I was being paid for. Turning him down was an essential part of my job, but purposely tormenting him wasn’t in my job description. But it was still fun. Meanwhile, I sent copies of the application to my competitors in our NACM trade group so they would be warned.
Then the next morning ‘Glen’ emailed me again:
Hello Norman,
Thank you so much for your feedback, What’s our company account number and you may go ahead with the quotation.
Once i have these then i can be able to provide you with our official purchase order. Thanks

Wait? What? The fish was still on the hook? My funny bone was nearly shaking with excitement, and I sent this response:
Approval on the new account is pending your response to the questions I asked below (see below in red). Please advise as requested and we can move forward.

He responded with this somewhat terse email, and I could see I was trying his patience:
What questions? Can will please proceed with this business all the information’s i provided was the only information i have at this time. Kindly let us know if will can continue with this business or not. Thanks

I sent this email figuring it might, just might, be the final email which would cause him to sever ties:
Sorry for the confusion. I wanted to know why you listed $17 million on the application, but your financials show sales of $1.4 million. That is a very large discrepancy.
And I asked about the social security number. the Social Security Administration doesn’t issue numbers beginning with 7

And get this, he still didn’t jump ship! To my funny-bone’s absolute delight he responded:
Thank you for the clarification. Our yearly income was $17 million but the one will had last due to the COVID 19 was $1.4 million and the SSN number i provided was the one i have on my system am sorry for the confusion with time i can be able to have the correct SSN # let us know if will can proceed with this business.

Now I had him perfectly set up for the final coup de gras I had been hoping for, but first, he needed a couple more hours to hang, so I sent this at 10:30:
Okay, hang tight please. I‘ll be back with you shortly.

And I let him dangle on the hook. And dangle so.e more.
And some more:
Finally, at 6:00 PM, I sprung the trap:
Dear Glen,
Thank you again for your interest in our products and services.
Your credit references and financials were very impressive for a firm with your excellent standing, and we are pleased to say that we will not be opening an account for you. I realized right away that you were a fraud and a crook and was just messing with you to waste your time and get your hopes up.
I regret that I cannot tell you where you messed up in your slimy plot, because I want it to bug you. I knew you were a fraud within sixty seconds of receiving your application.
Normally, I’d wish you the best of luck, but I really hope you end up behind bars.
Yours not at all, Norm

Of course, I never heard back.
A few days later, a competitor sent an alert about a very similar fraudulent application they had received that mimicked many of the earmarks of this scenario. Whether it’s the same parties or just someone utilizing similar tactics matters not, because it just shows they are still out there.
And watch out, they are getting smarter and more sophisticated. They may start cleaning up their broken English. They may set up phony websites. And since much of this is through email, carefully note the email addresses.
We had someone pose as a University purchasing agent once, and when I looked at the contact page, I saw the email address differed in format rather than just an added letter.
If I could make a suggestion to my fellow credit managers, it would be to confirm every application they receive is legitimate by confirming with the actual applicant using independent methods of communication, either calling, comparing email and phone numbers with information on the customer’s ‘contact’ page on the Internet, utilizing state corporate directories, etc.

Just my two cents.
Norm

Norman Cowie, CCE is Director of Credit for Paramont-EO, Inc. He has written articles appearing in the Chicago Tribune, Cynic Magazine, Business Credit and the Herald News. His current book titled, “The Illinois Mechanics Lien Statutes … and other construction stuff” is available for sale through NACM Connect. He also has ten published humor/ fantasy novels, some through traditional publishers Echelon Press, Quake Books and Draumr Publishing, although more recently he has transitioned over to Indie publishing.