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How an unusually large order can be a cover for a scam

While it’s not always obvious that a scam is underway, a useful rule of thumb is if a deal seems too good to be true, it probably is.

2 minute read

Being the target of a scam can put small businesses in a vulnerable position, where they could lose not only money, but time and resources as well. For a small business, these losses can have a significant impact on business stability and operations. 

This was the prospect Alex, owner of The Smokin’ Goose Restaurant and Beer Garden, found himself facing when a new customer placed an especially large catering order for a special event they wanted to host at the restaurant. Several red flags alerted him to the possibility this was a scammer, and when he reached out to BNZ for support, they confirmed his suspicions. 

1. Unusual orders

Alex says customers of the restaurant usually only order a selection of smoked meats, as this is their specialty. In the case of the suspicious order the ‘customer’ also ordered 10 burgers, which struck him as odd. It wasn’t a reason to suspect a scam on its own, but it raised alarm bells for Alex and meant that he was paying close attention to interactions with the suspected scammer.

2. Issues with payment

The reservation and order details were initially managed by a business partner, but Alex was left to finalise the order when his partner went on leave. Alex was alerted to the first red flag when payment for the order was declined. As he went back through the emails from the ‘customer’, he noticed that they seemed a bit ‘off’. 

3. Contact methods 

Following the declined payment, Alex reached out to the ‘customer’ asking if they could speak over the phone so he could try taking the payment again. The person denied the request, stating that they had a medical condition that prevented them from speaking and therefore preferred to communicate by email. While some people genuinely do have medical reasons that limit or prohibit phone conversations, scammers often use this type of excuse to keep their scam from being exposed. This was another red flag for Alex.

4. Complicated arrangements 

The ‘customer’ said there was a local florist they wanted to use for decorations, however they didn’t accept credit cards. They wanted Alex to charge their card for the additional cost of the flowers along with his own charges, and then transfer the amount to the ‘florist’s’ account. This seemed like a bizarre request, so Alex asked who the local florist was and said he would speak to them to work out a simpler solution. He told the customer he wasn’t going to accept the payment on the florist’s behalf if he didn’t know who he was dealing with. Although it's common for guests to request flowers or décor for special occasions, the unusual request that raised further suspicion. 

Of course, they couldn't give him the name of the local florist. This convinced Alex that something was wrong with this order. However, he couldn’t figure out how it was a scam if the scammer was paying the money upfront.

Understanding the scam

The reason this wasn't immediately identifiable as a scam is that the scammer provided payment information for the order upfront. What Alex didn't realise was that the bank could reverse the charge if the owner of the credit card reported fraudulent use of their card. This would usually happen during a dispute process initiated by the card owner's bank, and the account owner would be notified via email.

Alex says it's important for other small businesses to understand that even if you receive money from scammers in your bank account, the charge can be reversed into the originating account and have an impact on your business.

The situation could've been far worse if the catering order had been prepared, resulting in further loss of income and expenses, including the money paid to the scammer's account or fake ‘florist’ business. It would've also meant turning away legitimate customers while working on this order. Thankfully, it hadn't gotten to that stage this time.

Getting help

Once Alex suspected this was likely a scam, he contacted BNZ. From there, he says, it was a simple process to get it all sorted out. BNZ looked through the email communication and confirmed that it was fraudulent. 

Alex says he and his staff are always on the lookout for anything that doesn’t seem quite right. He recommends double checking anything that seems a bit far-fetched because the scam was quickly exposed once he requested a phone call.

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This article is solely for information purposes and is not intended to be advice with respect to any matter discussed in it. If you need help, please contact BNZ or your professional adviser. Neither BNZ nor any person involved in the material accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.