External Threats

 

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The superior man, when resting in safety, does not forget that danger may come. When in a state of security he does not forget the possibility of ruin. When all is orderly, he does not forget that disorder may come. Confucius (551 BC - 479 BC)

External frauds commonly originate with or involve customers and vendors. They are, to say the least, abundant. It pays to stay alert 24/7/365, as Confucius pointed out. We'll touch on the most popular scams here.

• Check Frauds -- It has been estimated that check fraud in our nation exceeds $60 billion a year . . . not just bounced checks, but every sort of creative tampering using ever-improving laser and color technologies.
• Credit Card Frauds -- Issuers of credit cards have been actively working to protect their product lines from abuse, but this remains an area of intense concern.
• Shoplifting -- Shoplifters range from opportunistic amateurs to kleptomaniacs to professionals who do this for a living.
• Vendor Frauds -- Bribes and kickbacks are the most common vendor frauds, easy to commit and off the books. But others abound as well, including bid rigging, over-billing, and frequent involvement of employee accomplices.
• ID Theft -- ID theft is rarely a stand-alone crime. It's almost always a component of two or more crimes, such as bank fraud, credit card fraud, access device fraud or the use of counterfeit financial instruments
• Franchise Scams -- Franchise scams aren't as prevalent as they once were. But for those wannabee entrepreneurs who impulsively dive into things that sound too good to be true, a bad franchise deal can be ruinous.
• Tax Scams -- Tax scams range all over the place, from frivolous returns to willful understatement of income to false statements and returns. Some tax cases read like a novel.
• Telemarketing Scams -- How often do you get unsolicited, high pressure phone calls with exotic vacation offers, or fantastic merchandise or cash sweepstakes prizes . . . but only good if you act right now?
• General Insurance Frauds -- Although only a small fraction of Workers' Compensation and health insurance claims are fraudulent, the cases that do occur are expensive, cut into your business's productivity, and can send your premiums sky high. And let's not forget the always-fun murder-for-profit claims, those false death claims, and the legendary "paper boat" claims.
• Health Insurance Frauds -- Health insurance frauds can be carried out by employees, agents, and providers with equally detrimental economic effects.
• Investment Scams -- Ponzi and pyramid schemes still succeed; Pump & Dump securities fraud is still alive and well. Each new generation is a fertile field of prospective victims.
• Bankruptcy Fraud -- Concealed assets and "bustouts" are the marquee transgressions in this area.
• Mortgage Fraud -- Material misrepresentations of income, false stated use of borrowed capital, understatement of liabilities, and a host of other scams make mortgage fraud one of the fastest growing white collar crimes in the United States.
• Money Laundering -- Money laundering is basically the process of running the ill-gotten gains from criminal acts through our financial systems to disguise their illegal origins and make them appear to be legitimate funds and, therefore, spendable.
• Mail & Wire Fraud -- Mail, wire and related frauds are federal crimes where the perpetrator has devised a scheme to defraud someone and has attempted to carry it out by using the U.S. Postal Service for sending fake invoices, or an interstate use of electronic means of communication such as a phone, a telegram, a fax, or the Internet for crooked online auctions and many more.
• False Statement Frauds -- Enron comes to mind, doesn't it? Off balance sheet "partnership investments," inflated income, liabilities undisclosed, advising employees the firm is making money so they won't sell the stock (at least not before the management has a chance to do a few insider trades!).
• Cybercrime -- Losses from cybercrimes, above and beyond the extremely costly viruses and the like, include insider abuse of net access, stealing or damaging data, creating denial of service attacks, and information theft. . . particularly trade secrets and other intellectual property.
• Internet Scams -- Welcome to the wonderful world of phishing, spoofing and 419 frauds.