Builders’ merchants: watch out for scams and fraud

Builders’ merchants should be aware of how fraud may affect their business, and steps they can take to avoid it.

Builders’ merchants must always be vigilant. Scams and fraud have always – and will always – take place in business, but by remaining aware of the risks and knowing the signs of fraud, the risk can be minimised. Builders’ merchants software can also assist you with fraud prevention.

Fraud doesn’t just affect your business directly. The indirect impact of fraud can also be significant. Even if you aren’t the party that has to deal with the costs of fraud, you may still suffer from a damaged reputation and even lose loyal customers over the issue. One of the most common types of fraud that indirectly impacts builders’ merchants is identity fraud. For example, the fraudster calls up the builders’ merchant and places an order for products, claiming that they represent a well-known local builder that has a trade account with the merchant. The company gets sent the bill and the fraudsters can pick up the products. This is done in a number of ways. First, many trade accounts only require payment at the end of the month, so fraudsters can easily collect items without having to pay for them. Second, they may visit the merchant for a small order and then collect other, more expensive items that the company is yet to pick up. This practice can cost businesses hundreds of pounds, and reflects badly on the merchants.

Avoiding identity fraud

Ensure that you implement some form of identity check when trade customers place orders, come to collect them or arrange delivery. This may be some form of verification code, or another company identifier. Bear in mind that the internet makes it easy for fraudsters to gain hold of company information and even staff addresses and personal details. Unless the caller is using a number that matches your records and you are confident in their identity, you may wish to ask them to confirm the order via email. From here, you can check that they’ve used a legitimate company email address.

This approach was taken by a Jewson’s employee in 2014. A caller had claimed they were from the highways department of the local council and needed to hire tools for a job. Once the confirmation email never arrived at the merchant, the employee called up the council to check the validity of the order. He was right to be suspicious, and promptly contacted other merchants in the area to make them aware of this scam.

The role of builders’ merchants software

While software alone cannot eliminate fraud, it can reduce the chance of it occurring. First, sending out confirmation emails automatically upon each order will immediately let companies know if a fraudster has bought or ordered products using their trade account. Alternatively, save company identification codes or other identity details within your client database, and ask for confirmation of these codes before accepting an order over the phone, via email or in person. 

Always double-check that trade orders are being made from a legitimate source. Don’t be afraid to ask for identification when items are collected by representatives from a company that you don’t recognise or haven’t served before. Restrict delivery to verified addresses, or perhaps the billing address only – where applicable.

Find out more about the many functions of Trader point-of-sale software, and give us a call if you’d like to learn more about how to prevent fraud as a builders’ merchant.