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4 Simple Steps to Prevent Fraud

Whoever is detected in a shameful fraud is ever after not believed even if they speak the truth. ~Phaedrus

It saddens me every time I see it. And I see it often.


According to Law.com the definition of fraud is “the intentional use of deceit, a trick or some dishonest means to deprive another of his/her/its money, property or a legal right”. For collection agencies, this most often means seeing debt that was never intended to be repaid.

Many consumers and companies have tough times and cannot pay their bills on time. These debtors, however, are often sly manipulators who will pressure the potential creditor into either performing work, or selling product, without any intention of ever paying them. They prey on goodwill, and promises of future profits. They’re the worst sort of human being.

But there are ways to prevent yourself from becoming one of these unfortunate victims.

Have a Credit Application at the ready

A Credit Application is a legal document that allows you to collect information from a potential client, and use it to decide if you are willing to extend credit. It can also be used to help collect on bad debts.

People often think of credit cards or bank loans, but really, credit is any transaction where goods or services are provided before payment is made.

Common fields in a Credit Application include: Name, Date of Birth, Address, Previous Addresses, Social Insurance Number (by law they do not have to give it to you), Financial Institution, and References. However, these applications are adapted by each creditor to make sure they are extending credit to a customer who will make payments.

It is important to have a Credit Application, and to make it part of your sales procedures. You may be worried about losing a sale because of it. Don’t be. Good customers expect credit applications. Only customers who don’t intend to pay you in the first place will seem put out by the introduction of this important document.

Check references and call the bank

Really smooth operators will fill out the Credit Application, give you their bank information, and provide references.  This doesn’t mean you’ll get paid. 

Some deadbeat debtors will actually give you references for companies they’ve stiffed in the past. Others will pay only certain companies just for the reference. To be sure, call all the references the potential customer provides. If you’re not sure ask for a reference for a specific industry, perhaps even your own industry. And always contact the bank to make sure the account has been active for at least one year, with no stopped payment or bounced cheques.

If the potential client is a company, and they’ve been in business less than five years always ask for a personal guarantee. Then, make sure they offer a personal Credit Application. Remember, incorporated companies are protected from debt collection if they close down. Best make sure you have some protection for when this happens.

Get documentation

When it comes to credit, always go in to the deal hoping for the best but preparing for the worst. In the case of debt collection this means documentation.

The best documentation you can have includes: a properly drafted and completed Credit Application, copies of bank information, Articles of Incorporation or Trade Name information, a credit report, and back-up payment information with the ability to use it if payments are returned NSF or stopped.

Some of this information you can ask for when the Credit Application is filled out. Others you will have to obtain once the application is completed. But never extend credit without knowing who you’re extending credit to.

Be okay with saying no

It’s hard to say no to friends and family, let alone a potential customer. It just feels wrong.

However, it is very important that you practice this skill. If a potential client demands credit without an application — even if you have previously provided goods or services in the past with payment upfront— be very wary.

Always keep in mind that the payment you could lose is not just profit, it’s expenses you’ve paid yourself plus the time and effort you could have spent with another paying client.


Hopefully, you will never have to deal with the fraudulent customer. But if you are ever confronted by one, you will now be ready for them.


If you would like more information on how to set up a Credit Application, and develop your Credit & Collections Policies and Procedures, please Contact Us today.

The landscape of Credit & Collections

Collection agency.

These two little words can send chills down the spine. I understand why. Over the years, so many debt collectors used shameful tactics to get paid that the term collection agency is now often met with hostility, even by non-debtors.

As collectors, we are responsible for the current landscape of Credit & Collections. I’ve worked with debt, and debtors, for over 12 years now.. So far, I’ve yet to meet a creditor who wants their image tarnished by associating with collectors who threaten, harass, or bully. Yet some unscrupulous collection agencies still employ the same tactics that have ruined our reputation.

I can’t understand why. Not only do these detestable gambits not work, they have actually driven debtors to voluntary bankruptcy.

Fortunately, the prospect of Credit & Collections is changing. With organizations like The Association of Credit & Collection Professionals and with legislation like the Fair Trading Act, collectors are now being held to a higher standard. Rather than taking the low road, we are now forced to become solution-oriented, or face our own consequences.

How can a collector be principled, and ethical, and still clear up accounts effectively?

For me, strong communication, empathy, diligence, and versatility, have been key. By making a good impression with the debtor, and by understanding their reason for non-payment, I’ve helped countless debtors resolve the burden of their obligations. After all, whether a debtor is a business or a consumer, we are still dealing with people. — Just like us.