The warning signals for bad business

24 Feb 2020

Suspicious PO box addresses, multiple changes to the board in a short period of time and shady straw men. These are the most common warning signs to keep in mind when doing business. 
“Having a rogue customer can have devastating financial consequences and also create badwill for the company,” says Christian Zittenbaum, education specialist at Dun & Bradstreet Academy. 

Do you obtain credit information about companies that want to do business with you? Good, but sometimes that’s not enough. This is according to expert Zittenbaum: “If the customer is merely creditworthy it can often get through the company’s credit process, and a rogue customer can then pick out cars, products or get credit, for example, without any intention of paying it back. Criminals know this and usually stay on the right side so that they are just creditworthy. Crimes can go undetected for long periods,” he says, and adds: “One of the reasons why criminals can continue with their criminal activities is that the people who investigate or conduct checks on these companies or people simply don’t notice the warning signals.” 

Real cases addressed

These warning signals are Zittenbaum’s specialist area. For almost 14 years, Zittenbaum, via Dun & Bradstreet Academy, has trained over 13,000 people in the art of spotting rogue customers and suppliers who are linked to, say, financial fraud. 
“There is a great need to learn to identify and interpret information in order to make the right decisions. This is one of the biggest challenges faced by our participants.” 
During the training, the participants learn up to 50 warning signals about people and companies. In addition to training in how InfoTorg works (see fact box), real cases are also addressed. 
“We shine the spotlight on everything, from Sweden’s biggest ‘fake’ registered owners of cars, falsified annual accounts used for credit fraud and suspicious addresses and PO boxes that companies hide behind to shady people who act as straw men for companies.”

The right knowledge and experience are required

The above examples are some of the most common warning signals, but according to Zittenbaum they are easy to overlook unless you have the right knowledge – and some experience: “If a company has record of non-payment totaling three million, most people realize there may be a problem. But a PO box address can mean different things to different people. For me, it could be a disreputable address where criminals gather their companies, while others are completely unaware of this,” he says. “One signal that can be difficult to pick up on is how long a member has been on a board. We have the example of a notorious straw man who always sits on a company board for one to two months. He joins just before the company goes bankrupt. Basically, he takes the legal responsibility so that the ultimate beneficial owners go free. It’s also not uncommon for the straw men to be homeless or to have emigrated from Sweden many years ago, which can make them difficult to trace.”


Create checklists

One good way of avoiding bad business is to create a checklist so that you don’t forget what to check – ideally through InfoTorg (see fact box): 
The service has a number of different features that, for example, can streamline checks of warning signals about people and companies. One of these features is the ability to create a custom report with the exact information you need in order to do good, safe business,” says Zittenbaum, adding: “Most of the information in a credit report can be found in InfoTorg but InfoTorg has plenty more besides. For example, you can see if the company or its board crop up in other legal contexts or if they’ve been convicted of a crime in court, which doesn’t show up in a credit report.” 

If you don’t use the types of check offered by InfoTorg, what risks are you exposed to?

“Clearly there’s a huge risk of getting tangled up with rogue companies or people whose purpose is usually to cheat you out of money.”