Local businesses suffered 350 sting operations in 2007, up by 30 percent since last year, and incurring losses of NIS 180 million, according to Business Data Israel (BDI). Such operations are carried out by customers acting on behalf of a company, who purchase merchandise on credit or with cash in order to establish trust with the supplier. After a few payments made in a timely manner, the customer disappears, leaving a debt to the supplier. In some cases the operation is conducted through straw companies established for the purpose, or impersonating employees from another company, ordering merchandise supposedly meant for the company, which is subsequently delivered to a different destination.
BDI economists noted that 70 percent of all such operations are conducted during the holiday season, since the busy business season creates a fast flow of a large quantity of goods, creating a suitable environment for large, quick cash transactions. About 20 such deceptions occur every week in the pre-holiday period, compared to about three such incidents per week during normal periods.
The number of such operations has dropped over the past two years as a result of greater precaution and innovative means to perform checks. In the past, increased economic risk factors have correlated with a rise in the number of sting operations, and BDI is concerned that the current increase could be an indicator of distress in the business sector. Eyal Yanai, joint managing director of BDI, notes that most instigators of sting operations have a history of fraud or business failure, and some perpetrators do so after finding themselves in financial straits, and are seeking to mitigate the deterioration of their business. Yanai recommends that merchants who encounter client companies with whom they are unfamiliar to check the client's business history.
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