Avoiding fraud: Contact parties, check addresses

Equipment lenders must be wary of the increased frequency of fraud currently plaguing the industry.  

Equipment financiers continue to face problems related to fraud schemes, such as no actual equipment in the deal, no actual lessee or no actual deal, Paul Bent, senior managing director and leader of legal services and business assessment practices at Alta Group, said Sunday during the Equipment Leasing and Finance Association (ELFA) Legal Forum in Fort Meyers, Fla.  

Two important ways companies and legal teams can avoid fraud schemes are to always contact the parties involved and question addresses, Bent said.

Contact all parties 

Direct contact and vetting with all parties through multiple points of contact with them can help ensure that a transaction is not fraudulent, Bent said at the forum. 

Certain instructions during a transaction should serve as a warning or red flag, according to Bent. 

“‘Don’t call anybody about me. I’m putting the deal together, and it would be embarrassing if anybody talked to somebody else and you didn’t go through me.’ Not only should that be a warning, but it should also be a red flag because that’s a thread that runs through a lot of these deals,” Bent said.   

Phone calls are the preferred method to ensure the security of large transactions, as resistance to phone calls is often a red flag about a deal, Bent said. “Pick up the phone and call whoever the lender supposedly is, the bank, the depository for that wire, and you can check it out very easily.” 

Be skeptical about addresses 

People should also be skeptical about addresses — whether they be e-mail, URLs, street addresses or bank routing addresses — during all equipment finance transactions, Bent said. In one transaction, a person was able to use bogus information on actual documents to complete a fraud scheme, he said. 

“We think one person did this whole deal, that he or she found the documents, duplicated the documents, changed the signature lines to reflect some bogus name, used the bogus email address and a bogus street address,” he said. “Otherwise, all the documents were actual documents.” 

Spotting fake e-mail addresses and links is doable with a proper understanding of how the schemes work, Bent said, warning that “just because it says ‘click here’ or it says ‘General Motors’ or it says ‘ELFA’ doesn’t mean that it’s going to direct you to anything to do with any of those parties. If you hover your mouse over that link, you’ll get a pop-up that will show the address that it’s going to.” 

Searching street addresses and bank routing numbers can also help avoid fraud, Bent said.