By Linda Collett, J.D., GABB Affiliate
If a potential client comes to you with something that sounds fishy or too good to be true, trust your gut. Here are some red flags:1. They want you to hold money in your escrow account (usually a large dollar amount so the deal is attractive). The risk is that the deal or client requires you to transfer some or all of the money out of your account before your bank has time to verify the funds are legit and can cover the transfer. This actually happened to a Georgia attorney awhile back and it was in the AJC. Talk about bad publicity for the attorney who got suckered; he was very embarrassed.
2. The transaction involves an overseas or out-of-state company wanting to do a deal with either an individual or a business located in Georgia, and they need a Georgia attorney or other professional to represent them.
3. They don’t tell you who the business is that they represent or want you to represent, but they do give lots of details about the transaction including attaching documents. Those details are to make it sound legit. There could be a legitimate reason not to disclose the parties until you sign a non-disclosure agreement or, in the case of an attorney, you officially represent your client and have attorney-client confidentiality, but it’s a signal to dig deeper before agreeing to anything.
4. If they do give you a company name, the company can’t be found online. Or, in one instance that happened to me, the Georgia company was real, but when I contacted it to verify the deal, they were not aware of it. They were quite alarmed that their company name was being used to potentially commit fraud. I think they reported it to the police.
5. The deal sounds too good to be true, either in terms of the dollar amounts involved (possible big legal fee) or that they’ve done the bulk of the work already. I’m not aware of all the possible risks of that situation but #1 above is one way the attorney or whomever is using their escrow fund can be defrauded. Turns out many attorneys got the same email as the attorney in #1 above but the guy in the article was the only one who admitted to taking the bait and losing a lot of money — into five figures.
6. The inquiry comes by email and the person can’t meet in person for some reason— i.e. they’re located out-of-town usually. Again, could be legit but it’s a flag to look deeper.
7. You can tell by the email that English is not their first language. Now, there are plenty of legitimate businesspersons who don’t speak English as a first language. But this, coupled with other suspicions, can signal a scammer.
8. They try to use legal sounding words, but in my recent situation that backfired because what he wrote made no sense and was a clue that it possibly wasn’t legit.
9. The length of the email can be short or long but it always involves some kind of exchange of money—some that I’ve seen include buying a big piece of equipment, collecting a bad debt, buying a business, you get the picture.
10. If you ask a question or seem like you might be interested then later say ‘no’ they get really pushy.
If you do find that you are the victim of a scam artist, you should contact a white collar criminal law attorney as soon as possible to determine your options.
Linda is the founder of The Collett Law Firm and uses a collaborative approach to help clients make business decisions within their level of risk tolerance. Her well-written, plain English contracts give her clients peace of mind by minimizing potential disputes and misunderstandings with their clients, vendors, contractors, employees, and business partners.