When Dan received a large shipment of highlighter markers, he was confused. He didn’t remember ordering them — and he was the company’s sole office supplies buyer. Yet when he received an invoice for the markers a week later, he approved it for payment. After all, employees were already using the highlighters.

Dan fell for a typical office supply scam — and his company paid for the mistake. Here’s how to protect your business from this type of fraud.

Common features

Office supply scams typically begin as telemarketing fraud, with someone calling your business to obtain your street address and the name of an employee. Callers may ask for the person in charge, claim to need information to complete an order or pretend to verify an office machine’s serial number. The goal is to get a name that will lend legitimacy to bogus shipments and invoices.

The fraudster then attempts to perpetrate an office supply scheme, including one of the following:

Phony invoices. A supplier ships poor quality products and then, a week or two later, sends a pricey invoice. The delay is intentional: The fraudster hopes you won’t notice that the final price is much higher than you’d pay for better quality products. The person is also hoping you’ve used some of the products and feel obligated to pay for them.

Promotional items. Some pretenders offer to send you a promotional item. Before they hang up, however, they’ll mention in passing that they’re going to throw some ink cartridges in with the free coffee mug. What they don’t mention is that they’ll also throw in a bill for the ink.

Gift horses. A perpetrator sends a promotional item to an employee and follows up by sending unordered merchandise to you. When you receive the bill with the employee’s name on it, you question the employee. The scammer is hoping the employee will be so nervous about accepting the promotional item that you’ll end up believing the worker mistakenly ordered the merchandise.

Stop supply fraud

To keep your business safe from office supply fraud:

• Tell employees to transfer all telemarketing calls to one or two designated buyers.
• Provide buyers with procedures for documenting and approving purchases.
• Set up a system for generating purchase order or internal reference numbers.
• Instruct vendors to include those numbers on their shipment documents.
• When you receive merchandise, inspect it and verify that you ordered it and that the packing list matches the box’s contents.

If everything’s in order, receiving employees should send copies of the bills of lading to accounts payable for reconciliation with the order.

Legal rights

Know that you aren’t legally required to pay for anything you didn’t order. Unless there’s a legitimate mistake on an order, you may treat any unrequested merchandise as a gift and use it as you like. If suppliers hassle you, discuss the matter with your legal and accounting advisors.

© 2020 Covenant CPA