Tech Data helped ProSys, a Norcross, Ga.-based solution provider, avoid being the victim of a scam at least twice in the past six months, according to Ted Glahn, ProSys CEO.
In the first case, a fraud ring allegedly secured an inside man who worked near one end-user business and then placed a large order with ProSys by pretending to be the end user. The inside man was able to track deliveries and, when an order was scheduled to be delivered, would meet the FedEx or UPS driver in the company's parking lot to accept the products there.
In this case, the UPS driver thought that was unusual enough to call Tech Data, the shipper, to say an employee met him in the parking lot.
"They were repeat offenders and had done this before with other companies," Glahn said. "Someone would be waiting in the parking lot and get the laptops, PCs, whatever, and just take it. [The products] would never really go into the business. Charges were pressed. Arrest warrants were made. They had done the same thing [before] and police were aware of who they were. It can be a bunch of money if you kept ordering laptops. Most companies don't pay invoices for 30 to 45 days and I would not have known had Tech Data not called me."
The second case involved credit card fraud. Someone had purchased several laptops from ProSys, through Tech Data, but Tech Data's anti-fraud system noticed that a bunch of orders had come in on the same credit card. "We knew nothing. Tech Data did not fulfill the order. They had some history with that card."
Many customers pay with credit cards, Glahn said. ProSys tries to protect itself but also needs to rely on Tech Data and others to help keep criminals at bay, he said.
"One of our customers pays with credit cards and the company uses their [rewards] points for corporate travel. We don't take that as unusual," he said.
The two instances would have cost ProSys more than $100,000 if the fraudsters had been successful, Glahn said.
"We're a $550 million company, but for VARs it's still a tight business. You can't lose $100,000 or $200,000 on the bottom line and not have a serious impact on you as a successful integrator. To me, 100 grand means another sales rep. I could hire somebody," Glahn said.
Since the two attempts, ProSys has increased efforts to detect and avoid fraud internally, Glahn said.
"We haven't had a lot of fraud, but a bad economy spurs bad activity. If we get a new customer, we do significant checks on their credit -- make sure everything is stable. [We] initiate calls to Tech Data and ask, 'Have you dealt with these people before?'" Glahn said.
"Fraud's a big thing. I was talking to [another distributor] and they got burned for some big things. Most of the distributors do. It's a serious issue," he added. "When you see a small reseller, maybe EBITDA [earnings before interest, taxes, depreciation and amortization] is $1 million, so losing $100,000 or $150,000 -- that's a lot of money. You're talking 10 percent of your entire earnings. It doesn't take much for those guys to get hurt."
PUBLISHED FEB. 4, 2013