Small business likely target of fraud through Internet phone service

Internet scams are as old as the technology itself. Recently, however, scam artists have been defrauding merchants via an Internet-based Telecommunications Relay Service. This service, which uses communications assistants who act as translators, provides equal access to the telephone network for people who are deaf, hard of hearing or speech disabled. The service is called IP Relay.

Unlike telephone numbers, which are easily traceable, computer IP addresses are virtually anonymous. It is this anonymity, coupled with the fact that Internet calls do not incur long distance charges, that makes IP Relay so attractive to scam artists. Posing as a deaf person, these fraudsters cold call businesses all day in search of unsuspecting merchants. Using stolen or manufactured credit card numbers and counterfeit cashier's checks, the international scam artists attempt to purchase large orders of auto parts, computer equipment, office supplies, clothing, bibles and more.

It is important for merchants to be aware of IP Relay fraud and employ practical fraud prevention practices to ensure that they do not become a victim of this crime.

• Know who you're dealing with. In any transaction, independently confirm the buyer's name, street address and telephone number.
  

• Don't accept a check for more than your selling price, no matter how tempting. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check. Don't send the merchandise.
  

• If the buyer insists that you wire back funds, end the transaction immediately. Legitimate buyers don't pressure you to send money by Western Union or a similar company. (Note: Banks will typically release the funds from a cashier's check immediately, or after a one to two day hold. If a merchant, believing that the check has cleared, wires the money as instructed, he/she may be notified by the bank shortly after that that the check was fraudulent, and the bank will hold the merchant responsible for the full amount of the check.)
  

• If you accept payment by check, ask for a check drawn on a local bank, or a bank with a local branch. That way, you can make a personal visit to make sure the check is valid. If that's not possible, call the bank where it was purchased and ask if the check is valid. Get the bank's phone number from directory assistance or an Internet site that you know and trust, not from the person who gave you the check.
  

• If you accept payment by credit card, ensure credit card is valid. Also make sure that the person using card is authorized to do so.
  

• Resist any pressure to "act now." If the buyer's offer is good now, it should be good after the check clears the issuing bank.
  

Merchants who receive an IP Relay call should be aware of the following "red flags" that may indicate that the phone order is fraudulent:

• Wants the order immediately
  

• Places large orders for multiple items
  

• Lack of knowledge of and/or lack of questions about the product
  

• Not concerned about the price
  

• Wants to use multiple credit cards, sometimes with numbers that are close together
  

• Poor English grammar or spelling
  

• Refuses to wire money directly to you
  

If a business accepts telephone orders from the general public, then hearing and speech disabled consumers must be afforded the same convenience. In a Public Notice released on June 18, 2004, the FCC issued a reminder to businesses that "Title III of the Americans with Disabilities Act of 1990 (ADA) does not permit merchants to treat persons with a hearing or speech disability differently than they treat others." Not only are businesses breaking the law if they refuse to accept relay calls, they may also be missing an opportunity to gain a new customer.

If you have been victimized by IP Relay fraud
If a merchant has been a victim of fraud via IP Relay, or receives a suspicious call via IP Relay, information documentation about the transaction is crucial. Whenever a situation such as this arises, make sure to report the fraud. Reporting fraud is vital to solve the problem.

The FCC is working with IP Relay providers to prevent, or at least reduce, the misuse of this important communications service. To file an IP Relay complaint with the FCC, call 1-888-225-5322 (voice) / 1-888-835-5322 (TTY) or go to www.fcc.gov/cgb/complaints.html. To report fraudulent IP Relay activity, contact the Federal Trade Commission at 877-FTC-HELP or www.ftc.gov.

It is important that merchants learn to recognize IP fraud in order to prevent it. By doing so, they can welcome calls made by legitimate relay users and ensure that everyone who wants to do business is given a fair chance to do so.