Fraudsters are swindling thousands of dollars from consumers by using the names of defunct, isolated or off-the-grid equipment vendors to create bogus websites and listings.
Fraudulent dealer websites are popping up in Alabama and other states, costing the equipment industry tens of thousands of dollars, according to the Better Business Bureau (BBB) of Central and South Alabama (CSAL). The fraudsters use a combination of bogus websites and false Craigslist listings to convince consumers to wire thousands of dollars to purchase equipment the “seller” doesn’t actually have.
“They took our $15k wire transfer for the tractor we were supposed to buy on 6-7-22, and it was supposed to be here on 6-18-22,” one victim said in a customer review comment to BBB on June 22, 2022. “No call, no show. They don’t respond, and if we call on a new phone, they hang up on us.”
Fraudsters are using excuses — such as delayed shipments or accidents — to stall for time following a payment in an efforts to keep each website active longer, Carl Bates, president and chief executive of the BBB of Central and South Alabama, told Equipment Finance News.
“Sometimes the story is ‘We shipped your equipment, but the truck got in an accident between here and New York, and we’re waiting now for the insurance company to tell us what the settlement is on the truck and the equipment,’” he said. “The scammers then proceed to lead on the customer for weeks.”
An open investigation
BBB officials initially opened an investigation last year regarding a business claiming to be Stephens Truck & Equipment in Millbrook, Ala., after receiving numerous complaints, according to a BBB CSAL release. The BBB then tracked vendor fraud connected to three company names: Stephens Truck and Equipment, Cleburne Trucking and Equipment and Black’s Truck and Equipment Sales.
All three names are connected to fraudulent schemes that, combined, led to thousands of dollars in lost funds for more than 50 customers, Bates said.
“We’re aware of 50 to 100 people who have sent money to these folks totaling thousands of dollars,” he said.
While BBB officials believe that those three fraudulent vendor websites are tied to the same fraudsters, others continue to discover different websites. Ansonia, Conn.-based Kar Kingdom and Clinton, Ark.-based Forum Flow Equipment are also suspected of fraudulent activity, UniFi Equipment Finance Chief Executive and President RJ Grimshaw told EFN.
UniFi identified fraudulent equipment websites through its own tracking efforts, Grimshaw said. The scope of the fraudulent websites is unknown, he said.
“This is a very new concept,” Grimshaw said. “This is why education is so important to the end users.”
Active fraud websites
Fraudulent websites use a combination of stolen information and fraudulent equipment listings that look to tricking consumers into purchasing. Black’s Truck and Equipment, still active as of publication time, features a landing page where customers can look at its staff and inventory, which are fake, BBB’s Bates said.
The inventory listed on the company’s website contains products that can be found on deleted Craigslist ads that had the same listing prices.
Several members of the team listed on the Black’s Truck and Equipment Sales fake website were taken from the website of Flower Mound, Texas-based Haag Global, a global forensic engineering and consulting company, according to an EFN analysis of each company’s website. Haag Global confirmed that these photos were from its website and that it has taken action to have the photos removed.
“You could see all these people they’ve got listed on the site that work for [‘James Black’] under ‘About Us,’” Bates said. “None of what it says there is real, and none of those people live in Beatrice, Ala.”
The Forum Flow Equipment website features Caterpillar and John Deere equipment on the landing page. The address listed on the website belongs to Grass Roots Equipment and Outdoors Bee Branch/Clinton, according to Grass Roots Equipment and Outdoors’ website.
Playing whack-a-mole
Although efforts to shut down these fraudulent websites are ongoing, stopping fraudsters is complicated, BBB’s Bates said.
“They probably have the next two or three [websites] already ready to go as soon as we bust them on this one, or they’ll close this website down as soon as the heat gets too hot and they’ll immediately have another one ready to open,” he said. “That’s been the pattern. … We’re playing whack-a-mole with trying to find these people.”
While the BBB may not be able to find the scammers, the FBI could leverage its cybercriminal resources, Bates said. The FBI Minneapolis Office, which covers parts of the Midwest falling victim to the schemes, continues to work to prevent fraud.
“Internet fraud is a growing threat to businesses and individuals alike,” an FBI Minneapolis spokesperson told EFN. “The perpetrators of these scams are sophisticated, and their techniques are constantly being refined. While the FBI is active in working to prevent and mitigate these types of scams, we encourage organizations and individuals to remain vigilant.”
Fighting fake vendor fraud
The equipment finance industry can do its part to combat fraud and protect consumers, UniFi’s Grimshaw said.
Due diligence, risk assessment, application review processes, fraud detection technology, collaboration with law enforcement, dealer relationships, customer communication, educational initiatives and reputation management can all help lenders fight fake-vendor fraud, Grimshaw said.
“Fraudsters know to keep the transaction between $25,000 and $50,000, where a lot of lenders’ processes are automated and in which no human intervention is involved until it is too late,” he said.
The BBB also advises that consumers, lenders and vendors remain vigilant and continue to inform them about fraudulent vendor websites and ads as they discover them.
