Fraudulent Companies Targeting Dairy Processors Again, IDFA Warns
IDFA learned last week that fraudulent companies are again targeting the dairy industry by placing orders and taking delivery on large amounts of products, then disappearing without making payments. IDFA issued similar warnings to members in 2002 and 2003 when these criminal patterns emerged and several dairy processors were affected.
"We learned last week that these criminals are operating out of California and Nevada," said Clay Detlefsen, IDFA vice president. "Please note that they can and do relocate quickly, so we urge members to use extreme caution and diligence in all locations to prevent being victimized."
The National Association of Credit Management (NACM) has identified a company known as Quest Star Wholesale, Inc. as a company to avoid. One IDFA member company told IDFA that it was approached by Quest Star, but no business was transacted.
In October 2002, the FBI contacted IDFA to inform the cheese industry about fake buyers that had created extensive business fronts with "dummy" offices, websites, credit lines, bank accounts and warehouses. These buyers were ordering and accepting large amounts of cheese, but after the products were delivered, the company disappeared with the products and without making any payments.
"These dummy companies and their credentials are apparently realistic enough to fool most people," Detlefsen said.
Noting that the past activities involved many different dairy products, Detlefsen urges members to conduct thorough background and credit checks on all new customers.
"A fraudulent company name and location can change at a moment's notice, so do not limit scrutiny too narrowly. Contacting the phone company for a company's complete listing is one of the first actions a dairy company should take when dealing with a new customer," Detlefsen said. "While the presence of a listing does not mean the company is legitimate, the absence of a listing should create suspicion."
The absence of a "sending fax number" in the automatic header on faxes from a customer also may indicate a problem. Customers who are always in a hurry, want to purchase a truckload or more of product and aren't concerned about product details are cause for concern, Detlefsen said.
Members are urged to immediately contact Detlefsen at 202/220-3554 or email@example.com regarding any unusual activities.
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Posted February 12, 2007