Tender scams: detection and prevention strategies in procurement processes

tender scams

Tender scams: detection and prevention strategies in procurement processes

tender scamsBehind the seemingly transparent and fair procurement processes lies a serious threat to companies and businesses, known as tender scams.

These scams often target companies and individuals by inviting them to participate in procurement offers or tenders that do not actually exist. The goal of this practice is to illicitly gain financial profit and/or access important company data.

Understanding how these scams operate is crucial for identifying potential red flags. One common indicator is the solicitation of unusual or irrelevant information during a legitimate tender process.

How tender scams work

Scammers employ a variety of tactics. They frequently pretend to be employees in the procurement departments of large, well-known companies. Their methods include using fake identities, bogus email addresses, and creating credible social media profiles. Additionally, they may set up counterfeit websites resembling legitimate companies and cultivate fake communities to lure unsuspecting victims into their scams.

With the help of Artificial Intelligence (AI), these deceptive activities can be carried out more smoothly. For example, scammers can skillfully compose tender invitation letters that are free from grammar errors.

Modus operandi

Be cautious if you receive a tender invitation that appears unusual from the standard procedure for inviting vendors to participate in procurement processes. Scammers distribute these invitations through various methods: 

1. Email

They often use email domains that closely mimic the official domain of legitimate companies, such as info@company.com becoming info@company.net, even though this domain name is not linked to the company’s official website.

The scammer sends emails complete with an email signature, logos, and project details that appear valid.

Engaging with the sender can pose various risks to the email recipient, including:

  • Fraud: the sender may request sensitive information or upfront payments under false pretenses, leading to financial loss.
  • Phishing: the sender might ask for confidential company data, login credentials, or personal information, which could then be used for criminal purposes.
  • Data breach: any information shared with the sender could be misused or sold, potentially compromising their company’s security and privacy.

2. Fake website

    To convince their targets, scammers often create websites or portals with addresses that closely resemble those of legitimate companies they impersonate. For example, the legitimate site might be www.company.com, while the scammer creates a fake site like www.compaany.com.

    3. Letters

    It is not uncommon for scammers to send invitation letters directly to companies or individuals via mail or courier. The content of these letters is similar to that of email invitations.

    Detection methods

    Detecting fraud always demands vigilance and skepticism. Firstly, ensure to verify the authenticity of the email domain, website address, and contact details. Legitimate and reputable companies always provide contact information that can be verified.

    Secondly, conduct a cross-verification with the company’s official portal or website to confirm the initiation of tenders. If the tender is not listed on the official page, there is a possibility that the invitation is a facade for fraudulent activities.

    Thirdly, establish a whistleblowing system that enables both external stakeholders and internal employees to report any suspicions of tender scams.

    Prevention strategies

    Employee education

    Educate employees about warning signs of scams and procedures for reporting them. Conduct this training regularly to maintain updated knowledge. 

    Verification procedures

    Enforce rigorous verification procedures for all tender documents and payment requests.

    By understanding the modus operandi and implementing effective detection and prevention strategies, companies can safeguard themselves against the risk of tender fraud and ensure transparent and secure procurement processes.

     

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