U.S. Collection Agency Foils Advance Fee Scam

The scamsters have landed in the U.S.

A fraud targeting Canadian commercial collection agencies has touched down in the U.S. and the crooks were still answering their phone yesterday afternoon.

The fraudsters unsuccessfully went after New York City-based National One Credit Corp., in March, sending an email requesting its help in going after a $300,000 debt for a contingency fee of 20 percent, according to National One owner David Matten, who contacted insideARM to share his experience with the crooks.

The fraud follows the pattern seen in Canada. In the so-called “advance fee” scam, one company hires a collector for a fee to collect a debt from another firm. The agency contacts the debtor, and the debtor quickly sends to the agency a check that on first pass appears to be legitimate. The collection agency takes its fee and pays its client with funds from its own account as it waits for the check to clear. But the check turns up with insufficient funds. By that time the fraudsters are long gone.

The scam is causing the collection industry to take notice. ACA International, the collection agency trade organization, posted on its Web site in April a warning on the scam. A spokesperson said the ACA is monitoring the situation and plans to send out an alert on its site and through a monthly email newsletter.

Matten said that a firm calling itself China Aviations Ltd. hired National One to collect the debt from Component Aircraft. China Aviations said that Component Aircraft was based in Russia, and that the collector should instead contact its middle-man firm, Fruition Trust Management & Loans, a firm with offices in Edmonton, Alberta, according to its letterhead.

Matten said National One contacted Fruition Trust and within days received a check for $288,945.35. That sent warning signals to Matten who felt the collection was too good to be true.
“This was the easiest $40,000 to $50,000 I ever made. I said, ‘Why should I get so lucky?’” Matten told insideARM. Matten never cashed the check, but sent a copy of it to Alterna Savings, the Canadian bank that it appeared to be drawn on. Alterna told Matten the check was counterfeit.

Matten warns that the fraud has a surface-level sophistication. For example, the check looked legitimate with raised lettering. The crooks also sent Matten a copy of what it said was its contract with Russian firm, and a copy of a payment from the firm. And a skip trace found that the address on National Fruition’s letterhead is good though there is no firm by that name at the address, said Matten.

He notes that the crooks continue to operate and are answering their phones. He said his contact there has used the name Mark Richard, Mark Roche and Mark Smith.

InsideARM yesterday called the number on Fruition Trust’s letterhead and reached a man calling himself Peter Richard. Richard refused to give his title during the garbled connection but said the firm was located in Edmonton. After learning that insideARM was a media outlet, Richard said, “I think this conversation should be over right now,” and hung up.

Crooks have already gone after at least two Canadian agencies with the advance fee scam.

Yesterday, insideARM reported on the experience of Calgary, Alberta-based W.D. With and Associates (“Scammers Up the Ante in Targeting Canadian Commercial Collectors,” May 5). The modus operandi was similar to that of National One, though the scammers claimed they were owed money by Micron Technology, a $5.7 billion semiconductor manufacturer.

In April, crooks targeted Ontario-based collection agency Financial Debt Recovery with the advance fee scam (“Canny Collection Agency Spots Fraudsters,” April 21).