Special interview with Summit TV
Summit TV speaks to Jacqui Jooste from Coface about the spate of credit applications where fraudulent operators posing as blue chip companies take delivery of goods and then vanish into thin air
ERIKA VAN DER MERWE: Welcome to Business and Insurance, my guest is Jacqui Jooste from Coface. Jacqui, you’re highlighting a new form of identity fraud - this time targeting companies - and I understand it has significant financial consequences for businesses?
JACQUI JOOSTE: Yes, especially over the last six weeks or so we’ve picked up a huge increase in this identity fraud - and it has huge financial implications. On the insurance side we at Coface South Africa offer credit insurance - however criminal activities and fraudulent activities are not covered under that insurance policy.
ERIKA VAN DER MERWE: So that’s a warning about why companies should listen to your story today - what is it that these fraudsters do?
JACQUI JOOSTE: They will misrepresent themselves as being part of a large well-known company open up accounts with a whole lot of suppliers and then go - and then go and collect goods at those premises. Obviously the company - and us as the credit insurers - will grant that credit without batting an eyelid because they are well known companies, however these fraudsters misrepresent themselves totally.
ERIKA VAN DER MERWE: How can something like this happen? I understand you’re talking significant amounts of money - hundreds of thousands of rands...
JACQUI JOOSTE: Yes, it can be. What we believe is they will obtain copies of documentation from these companies - so they really are the proper application forms, even VAT registration numbers, copies of RD cheques - and they will use that to apply for credit.
ERIKA VAN DER MERWE: How do they get past the system? Surely there must be rigorous credit checking procedures and order procedures?
JACQUI JOOSTE: Yes. On the face of it, it’s all 100% legitimate - the directors listed are correct - so in the checks that you do you won’t pick up any devious action. What you do however need to look out for however is if they’re going to collect the goods - because that’s obviously a sign that you aren’t delivering it to the premises, they’re collecting the good from you - and how they’ve submitted the application. We find very often only cell numbers are provided and not full company details - and the application might not have been faxed from the premises so the fax isn’t actually identified.
ERIKA VAN DER MERWE: You’ve said that you’ve seen an increase in this kind of activity in the last month or so - is this typical for this time of the year and why?
JACQUI JOOSTE: Historically we have definitely seen an increase in fraudulent activity around this time of year - I think mainly it’s the end of the year people are closing off, and people are trying to push sales in the last month of the year, there’s skeleton staff, and just maybe not 100% focused on what we should be focused on at this time of year.
ERIKA VAN DER MERWE: Can you put it into perspective - how many of your clients have been affected this year, and could you put amounts to the fraud?
JACQUI JOOSTE: In the last month or so we’ve had four cases that we know of, and you’re probably looking in the region of R1.2million…
ERIKA VAN DER MERWE: None of which will be insured?
JACQUI JOOSTE: No.
ERIKA VAN DER MERWE: So just finally as a word of warning what can companies be on the lookout for? What sort of checklist?
JACQUI JOOSTE: Look out for if cell numbers are provided, if trade references are not provided correctly. Just be extra aware and extra vigilant - contact the company that is applying for credit and say “we’ve got this credit application form” and just confirm that directly with the company. That would be a good way to pickup potential fraud…
ERIKA VAN DER MERWE: Is this the dominant form of fraudulent activity within companies?
JACQUI JOOSTE: In terms of our experience as Coface South Africa in the credit insurance side yes. We have had cases in the past which are slightly different - where a company would trade for two or three years with a very good credit record, then all of a sudden increase their credit limits to all the suppliers - and then over night disappear with millions of rands worth of goods never to be found again. That’s a different type of fraud we’ve experienced in the past.
ERIKA VAN DER MERWE: As you indicate this time of the year is certainly a time to be on the lookout - be vigilant and don’t be too relaxed.
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