Manufacturing Fraud & Scam

Manufacturing fraud and scams often go under the radar due to high activity and time - sensitive operations. Understand what this entails and how to identify red flags to stop fraudulent schemes.

Manufacturing Fraud & Scam

What Are Manufacturing Fraud and Scams?

Inventory fraud schemes and non-cash thefts are prevalent in the manufacturing industry. Employees might be tempted to share trade secrets and intellectual properties if the price is right. When left undetected, these crimes prove costly to the company.

Additionally, it creates mistrust between organizations and consumers, especially when there are delays in delivery, the sale of counterfeit products, and unauthorized use of their credentials.

Purpose & Intent

Factories and warehouses are highly susceptible to manufacturing fraud and scams due to internal corruption and deception. Scammers use the high volume of manufactured goods and busy schedules to run discreet scams. Typical schemes include forging records to extort money and stealing merchandise
in batches to resell at a higher price or for personal use.

Common signs of manufacturing fraud:

  • Unexplainable inventory shortages
  • An influx in invoice volumes and payments made to unknown vendors
  • An abrupt surge in customer complaints about counterfeit products and damaged goods.

Avoid this type of scam by enforcing strict rules and regulations. You can take preventive measures such as reviewing the authenticity of consumer accounts, analyzing records, checking inventories routinely, and setting up a hotline to report illegal activities.

File a complaint to fight fraud and promote a safer environment with FraudTrac.

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