Know your Customer: Tools to help prevent Fraud and Insure Patriot Act Compliance. ELA Credit & Collection Conference June 8-10th, 2003

Transcription

1 Know your Customer: Tools to help prevent Fraud and Insure Patriot Act Compliance ELA Credit & Collection Conference June 8-10th, 2003

2 ELA Credit & Collection Conference Moderator: John Rosenlund Financial Pacific Leasing, LLC Speakers: Julie Fellows-Mason Key Equipment Finance Peg Maloney Dun & Bradstreet Robert Elkins Southwest Bank Curtis Zoehrhof Wells Fargo Finance David Churchill Key Equipment Finance

3 Transaction Issues Fraud Definitions Vulnerability Transaction Level Application Underwriting Vendor/Equipment Transaction Flags Remedies Q&A

4 Fraud Fraud \frod\ n [ME fraude, fr. MF, fr. L fraud, fraus; akin to Skt dhvarati Fraud: Trick-cheatimposter intentional perversion of truth DECEIT, TRICKERY; specif. intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right b: an act of deceiving or misrepresenting: TRICK 2 a: one who is not what he pretends to be: IMPOSTOR; also: one who defrauds: CHEAT b: one that is not what it seems or is represented to be syn see DECEPTION, IMPOSTURE

5 What is Fraud? (Legal Viewpoint) Block s Law Dictionary defines fraud as all multifarious means which human ingenuity can devise, and which are resorted to by one individual to get advantage over another by false suggestions or suppression of the truth, and includes all surprise, trick, cunning, or dissembling, and any unfair way by which another is cheated.

6 Where is the Vulnerability? Information (Application Process) Source Vendor Broker Lessor Is their information source reliable? Systems Compatible Secure (Password/Firewall) Control (Can data be changed outside?) Authentication Databases Paper Verbal

7 Transaction Level Application Data Underwriting Vendor/Equipment

8 Application Data Source of Information Trustworthy Accurate/Complete Verified Authenticated Rep s & Warranties

9 Underwriting Electronic Verification of Information (CBR, Databases, PayNet, etc.) Equipment Review/Evaluation Deal Verification (paper & verbal)

10 Equipment Type Use Value Vendor/Equipment Actual Cost vs. Requested Amount New or Used Verify Prior Ownership UCC Search Invoice & Delivery Date > 30 Days Old? Problems?

11 Transaction Flags There are usually one or more of the following flags in each of the area s we will cover, that is evident in fraudulent transactions: Application Investigative Equipment Vendor

12 Application Flags Application is incomplete Request for landlord information is refused. Lessee will not provide updated financials. Broker, Vendor, and Lessee are all located in different parts of the US with no explanation of commonality. Home, business address are post office boxes. Credit references/cbr reflect recent closed accounts. Phone number(area code) do not match address.

13 Investigative Flags Job title misspelled or unusual fit to type of employment. Years of employment doesn t correlate with age. Guarantors unrelated to the business. A transaction that has numerous recent inquiries. Financial Statement not signed or has unusual format. Mystery affiliate. Commonality between Lessee and Vendor as to names, phone numbers, etc. Unable to reach Vendor or Lessee by phone, always receiving answering machine. Any situation where you are asked to make numerous exceptions. Pressure to rush transaction for decision by Lessee or Vendor.

14 Equipment Flags Generic invoice not numbered or dated. Equipment is an overkill. Incomplete equipment descriptions. Resistance to providing brochures, model or serial numbers. Equipment isn t suitable for particular business. Equipment is not commonly known or recognized by description or brand name.

15 Vendor Flags Vendor is new in business or to industry Vendor does not want the Leasing Company to contact the Lessee Lessee/Source owns or has vested interest in Vendor business Vendor is not listed in phone book or other on-line sources Vendor has no resale number, invalid number or a number belonging to another business Vendor payment is requested to be sent to a different address not listed on the invoice Generic invoice that has a low number or no number at all Invoice date is over 30 days Vendor/Lessee try to bypass broker and work with funding source

16 Vendor Flags If a corporation, is not listed with Secretary of State or they are not in good standing Vendor is not an authorized dealer for the equipment Vendor or ship to address is is a P.O. Box Vendor answers the phone with a different name than that on invoice Vendor check is returned due to wrong or incomplete address Vendor presents only an 800 number and doesn t have a local listing

17 Combination Flags The over eager owner Questionable financial statements The mystery affiliate Guarantors are unrelated or have minor interest to business Trade, bank and vendor phones are similar Equipment not suitable for the particular business Vendor payment requested to go somewhere other than address on invoice Commonality between Lessee and Vendor (numbers, names, etc.) Is the equipment commonly known by description or brand name? When you are asked to make numerous exceptions to policy The invoice is generic or appears fabricated Any transaction where the Lessee communicates directly with FP without involving the Broker/Vendor

18 How Do We Protect Ourselves? Ensure Source of Information is Trustworthy, Accurate and Verifiable Use Electronic and Paper Sources to Conduct Due Diligence Ensure your Information Systems are Adequately Secured Establish Comprehensive Training Program Establish a Fraud Prevention Policy Establish a Computer Use Policy Establish a PR Plan

19 Questions and Answers