P.O. identity theft/money-wiring transactions

By Robert Holtfreter, Ph.D., CFE, CICA, CBA

Taking Back the ID: Identity theft prevention analysis

Don't pay that purchase order or make that money wire before reading this column. The author outlines the latest frauds — fake purchase orders to steal merchandise and innumerous money-wiring scams — and how you can prevent them.

The purchasing department of ABC University received an invoice from a well-known office supply retailer for more than $5,000 that included the "purchase" of two expensive laptops. To validate the "purchase" and prepare it for payment, an employee of the department tried to trace the vendor's invoice to a purchase order, which is required to approve and place an order, but couldn't find it. The employee then emailed department chairs and managers across campus asking them if they'd ordered the items included in the vendor's invoice. The response was an overwhelming "No." Nobody recognized the "purchase." The manager of the university's purchasing department then called the office supply retailer and told it they hadn't placed the order and hadn't received the items listed in the fake invoice.

An employee of the sales department of the office supply retailer investigated the problem by first examining the purchase order that was sent to them to initiate the order. The employee concluded that it looked very similar to the ones used by that university when they placed an order. The vendor faxed a copy of the purchase order to the university to acknowledge its receipt. A university employee called the vendor with the news that the purchase order was a fake.

The vendor realized it was a victim of an identity theft scheme appropriately called "purchase order fraud" by the FBI. It happens when a fraudster takes on the identity of an academic institution, creates fake documentation and then orders merchandise from an office supply retailer. The shipping address on the fake P.O. wasn't the university's. And the P.O. number was out of order from the other P.O. forms.


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