Fraudster targets UK scrap firm in deposit scam

London 04 July 2008 09:49

Unsuspecting buyers, mainly in the Far East, have paid as much as $50,000 in deposits to a devious fraudster appropriating the identity of one of the UK's largest scrap companies, Metal & Waste Recycling Ltd (M&W).

The fraudster – using the name “Emmanuel Peterson” – changed the link of the email address and siphoning off people interested in genuine M&W products to a cloned website.

Invoices and order confirmations were then sent out on fake “Metal & Waste” letterheads, which were “signed” by “Peterson”.

In order to buy material at supposed discounted prices – in some cases grades of scrap were falsely advertised for as much as 50% below the market price – buyers were asked to pay a non-refundable, 10% deposit upfront.

“This has all the hallmarks of classic advance-fee fraud,” said John Rice, M&W’s director.

False advertisements under the name “Metal Waste Recycling” were placed on alibaba.com and other global B2B websites.

The real Metal Waste Recycling is a dormant company owned by M&W, who registered the name to prevent competitors from using it.

The fraudster even changed the address the company is trading from with various credit agencies in order to boost its own credibility, causing huge problems for the real M&W.

A second bogus, but not cloned, “Metal Waste Recycling” website was created in Spain, using information and pictures from M&W’s own website, including quotes of the chairman and sales director. Photos on the site were fakes. “Information” was also adapted to create the illusion that M&W was based in Madrid.

M&W became aware of the problem towards the end of May, when a regular customer enquired about the low prices advertised by “M&W” on a website.

“We’re getting phone calls from people, mainly in the Far East, who have wired deposits and want confirmation about delivery details,” Rice said. Deposits paid so far are estimated in the region of $50,000.

While new buyers would usually visit scrap yards to ensure the quality is right before they start purchasing from them, the fraudster has been setting buyers at ease by playing upon M&W’s size and good reputation, Rice said.

After complaints to the police, FBI, UK Trading Standards and website host Yahoo went nowhere, M&W instructed a private firm, Haymarket Management Services, which specialises in corporate fraud, to investigate the matter.

“It’s taking a lot of management time and effort to set this right,” Rice said. “They’re not only defrauding customers: they’re also potentially harming our business.”

Taking into account the difficulty it has encountered getting this dealt with through police channels, M&W will focus on disrupting the fraudster’s activities, a technique often used by law enforcement agencies.

“We are going to make sure that any bank account in the UK will be closed down, and we’ll use anti money-laundering regulations. We will also be asking Ofcom [the UK communications watchdog] to close down the telephone numbers he is using. We hope he decides things are getting too hot and shuts down,” Rice said.

“More importantly though, is to try and get the [fraudulent] websites closed down. Their ability to maintain the fraud is linked to the fact that they can advertise and create the impression that people are dealing with us,” Rice said.

Rice said it will take at least another two to three weeks to reach a conclusion on the matter and warned buyers and other scrap companies to be careful and remain vigilant.

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