When you walk into a car dealer to talk about Check Guarantee, you would of course explain that Guarantee will cover Car Sales, as well as the Parts & Service area. Often, a Mega dealer will sell two or three times as many parts wholesale as they do in the Service Department.
More and more American businesses are falling victim to so-called bust-out scams, commercial-fraud schemes whose perpetrators set up bogus companies or take over legitimate ones, buy goods on credit, resell them at big discounts, then disappear without paying the debt, or file bankruptcy.
Bust-outs are on the rise across the country, those who track them say. According to one estimate, the number of bust-outs has doubled over the last five years. "There are thousands," says Robert Lawson, loss-prevention director at the National Association of Credit Management, a trade group that works to stop business fraud.
CrossCheck Inc., one of the nations' leading Check Guarantee Providers, is prosecuting such a case. In this case more than $42,000 from a previously profitable merchant was stolen, through bad checks written for equipment purchased for resale.
The financial impact on U.S. companies from bust-outs and other commercial fraud, said to be the fastest growing white-collar crime, is rising dramatically. In 1995, the Commerce Department estimated the total loss to business at more than $200 billion, nearly double the previous year's loss.
While bust-out artists cross into all industries, targeting everything from durable goods and apparel to foods and even steel, their illegal activity recently has picked up in such competitive markets as computers and electronic equipment, observers say.
One tantalizing favorite is the computer chip. A half-million of these can fit in the palm of a hand, can be put into any computer, and can't be traced. These "are like diamonds" to a bust-out artist, says one expert.
The increase in fraudulent activity comes as companies are under greater pressure to boost sales and increase profits. Often payment by check, particularly when "Guaranteed", allows the merchant to accept a sale that their own Accounts Receivable process would not have accepted.
"It is because of this growing problem, that CrossCheck announced our Wholesale Check Guarantee program in January 1996," says Bob Ficarra, CrossCheck's Vice President of Marketing and Sales. "CrossCheck has always been a risk taker when so many of our competitors are risk avoiders," said Ficarra.
[Go Back]
