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A few years ago I had an enquiry from a potential client who was an acquaintance of a friend.

I had my doubts early on that he was a scammer but initially gave the benefit of the doubt, and then continued out of curiosity as to what he would do, with no intention of ever parting with money or doing work without a full contract in place.

The following is a brief outline of some of our interactions, along with alarm bell triggers, which I include mainly for the benefit of those who may face a similar situation and who may want to know how such a scam might progress (questions at the end):

  1. Initially very hazy about what his business did. Didn't seem to be able to give an adequate explanation of how it worked, his product or target market.
  2. Vague and suspicious story about previous web designer who disappeared without finishing the job (I asked him about any previous sites or design work carried out on his business). There were a few graphics and a page of text but there never was an actual website for the business.
  3. Met in small rented office with no phones, computers or filing cabinets.
  4. Checked out the business name on Companies House register (the official UK corporation register for those who don't know) and the name is listed there but I didn't pay the fee to get more details. Thought it could be a sign of legitimacy.
  5. A phone call one evening that he had to pay an urgent bill but all his payment cards and cheque books were locked in a filing cabinet for which he had lost the key. Wanted to borrow money from me to pay for a locksmith and to help pay the urgent bill (first major alarm bell that made me conclude this was most likely a scam in progress). I said I couldn't help with that and to have a chat with his bank.
  6. Silence for about 6 months. Then another phone call wanting to continue the web development work.
  7. More vague information over the phone followed by a face-to-face meeting in which he requested to borrow from me £2000 to help with some cashflow problems and said he would pay me back "generously". I said I'm not in a position to help with those sorts of things.
  8. I didn't hear back from him for about a year. Then I got an email out-and-out just asking for £20,000 to help with his business (again offering to make it "worth my while"). I ignored it.
  9. Another year or so, last November, he contacts me again and is just interested this time in getting the website built again. I'm curious to see what he says this time so I go along with it. I tell him I can't meet him but we can talk on the phone. He says he has dissolved his last business (checked out Companies House register and the business name is listed as dissolved). I checked their list of disqualified directors and his name does not appear there.
  10. He is reluctant to call me asking me to call him because of the cost of his mobile phone tariff. He wants me to always call him (though it also costs me more to call mobiles!). He does not have use of a fixed-line phone and uses a public telephone box when I ask him for fixed-line number to call.
  11. I email him my contract and fee schedule and tell him I need his signature and an address to send it to (thinking it would put him off) - he seems willing to sign it; however, he keeps telling me how his business is in the process of being "reconstituted" and they don't have an address yet but I can send the contract to the address of one of his "associate partners" whose office he is temporarily using (in the same serviced office building as before).
  12. He was also reluctant to register the domain via my web hosting website and he wanted me to register it for him and add it to the overall bill for web development. I told him I keep the two services separate (partly because I prefer to do it that way, but also I wanted to see if he would give an address after I told him the domain can be seized if he provides false information). He is making vague excuses for not doing that.
  13. Now he is saying things like "you said you would start on this date" and "there seems to be a miscommunication" and "I can go to someone else to do the website if you prefer".
  14. I have just now told him that I expect him to sign and return the contract before I start doing any work and that he needs to sign it either as an individual providing his home address, or as a representative of his company providing the trading address that is registered with Companies House.

UPDATE: A month later I receive no reply after asking for a home or registered trading address - the strongest evidence of a scam, I think.

Questions:

  1. Are scams like this widely experienced by other freelancers / small businesses?

  2. What can be done to inhibit the risks of people falling for such scams?

  3. As he has done nothing illegal yet, are there any standards, quality-control, or investigatory groups that monitor/investigate potential scams from B2B clients / customers?

There are usually several official/unofficial organisations that monitor & investigate unscrupulous traders and service providers but, as far as I am aware, none that look into clients.

  • Possibly the last web designer took on the job and never got paid? Possibly, the client just took the graphics and text from another website as a way to try and confer legitimacy. – authentictech Jan 10 '14 at 18:52
  • Wait! Have I just read you borrowed money to your client?! Really? To a person you've met a while ago? A step 5 was alarming enough so I am not sure how you came up to point 14. ;) – Peter MV Jan 11 '14 at 8:49
  • @PeterMV Now I haven't lent him any money (yes that would be crazy!). He has just asked for it in the past. These interactions happened in 3 brief periods (4 if you include the time he sent an email out of the blue asking for money which I ignored) over a period of about 3 years. It has never gone further than initial discussions but has always ended after he asks for money, I refuse and he disappears again. As I said, I am curious to see how it pans out and, to be honest, if he shows evidence of a scam I am hoping to find a way to shut him down. – authentictech Jan 11 '14 at 14:04
  • There's a small part of me that thinks he just very naive and would like also to see some evidence of being genuine. Maybe I am foolish for that... ;-) I have put in place a protection for me that he must give me an address which I will check for being genuine and then I will be asking for some payment early on and at regular intervals to make sure he is willing and able to part with his money. :) – authentictech Jan 11 '14 at 14:10
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    Any client asking to "borrow" money from me doesn't know how to run their business and I won't work with them ever again. And certainly wouldn't entertain any business after the first request to "borrow" money. Scam or not... it's just a bad business relationship for anyone. – Scott Feb 14 '14 at 17:25
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I actually have to say, I don't think this is a "scam". He has been in touch over a very extended period of time. I do think how this is a very bad idea.

I often meet other freelancers, who with all the best intention in the world really do believe they have the next Facebook. I believe you may be dealing with someone who isn't fully aware of what makes businesses work and may always be likely to blame others for failures which are evidently their own.

Check what you bank offers Many banks, including my own, offer services to help businesses. Barclays offers a credit check service which allows you to check someones credit history without them ever knowing; best of all the first 5 (I think) are free.

If you are in a situation like this already I would recommend you speak to legal services of some description as soon as possible. It is worth noting that anything discussed over the phone is worthless, make sure everything is in writing somehow.

The bottom line: Stay far, far away from anyone who won't give an address and sign a contract.

  • Thanks, particularly for the advice about credit checking. I hadn't thought of that and some way of genuinely confirming his credibility is something I was looking for in the answer. There's always the chance he is legit but very naive. I would need a home address for credit checking, I am presuming, which I doubt I'm going to get but actually that is a good way to see, if he is legit and gives the address, if it's worth taking him on as a client. – authentictech Jan 10 '14 at 18:50
  • From what you have said I would say he is naive. Spammers wouldn't pester you for so long. – tim.baker Jan 10 '14 at 23:17
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    I would hesitate to just chalk this up to naivete. He's going through a lot of contortions to hide where he lives and where his business is actually operating from. This is quite deliberate and consistent, and I can't think of any legitimate reason a genuine business would need to be so deceptive about giving out basic business information. That, and the wild stories he's giving for why he needs you to lend him money don't add up to someone who is genuinely ignorant. It does add up to someone who is trying to pull a con job on you. – TeresaMcgH Jan 11 '14 at 1:05
  • Since I have heard nothing for 3 days after I asked for his home address in place of a registered trading address, I am now 100% certain he is a scammer who has made a degree of effort to appear legit. – authentictech Jan 12 '14 at 15:22
  • @tim.baker I am going to mark this as the answer because you made a helpful suggestion of action besides "don't do business with him" (which I agree with but it's a more obvious suggestion). I am just concerned about giving the impression that I agree that it was not a scam. Would you revise this opinion given that the client disappeared as soon as I (politely) asked him to use his home address in the contract if he cannot give an official business address? – authentictech Mar 21 '14 at 12:59
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Leave this dude alone. You're going to get burned. There is nothing particular to web site development that this guy is doing.

Let's look at this objectively. This is someone who you don't have any vested relationship with -- an acquaintance; not a close friend or family member. To add, he hasn't even become a customer!!! Yet he felt it was okay to call you on three occasions to ask you for money. Do you think he called his banker, or asked the manager at the grocery store, or walked into a police station and approached the person at the front desk, and subsequently asked for a significant "loan"?? No! And you already know, in each of these situations, what would have happened.

The promise of becoming one of your customers is the "golden carrot" he's dangling in front of you just to keep you from ignoring him outright. He probably does the same thing with mechanics, building contractors, SMALL business owners, and so forth all over the place. If there's a scam, it's just to keep these sort of people close to him until someone takes the bait. It's not illegal per se. But the other side of the coin is that once he gets what he's looking for, his victim will have no way of finding him ever again -- that's deliberate.

The only thing you can do is that when he calls, FIND SOME CONVENIENT EXCUSE TO END THE CALL RIGHT AWAY. I'm saying this because it doesn't sound like you can use your caller-id to notice the call and not answer at all -- he keeps moving around. If you do what I'm saying, he'll eventually get the idea that you're on to his game, and leave you alone for good. But you must be firm about it. Because he's a friend of a friend, you may run across him again. If you do, and he gives you the story about how he's been trying to get in touch with you, play "stupid" - engage in as little small talk as possible, but do not engage in conversations about more business because the same mess will start all over again.

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    Agree 100%. He's given his game away several times to my mind. I am kind of hoping the question and answers will be helpful to others though. I was more curious how it would pan out than expecting any custom from it. Thanks. – authentictech Jan 10 '14 at 17:07
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    Every once in a while, I am surprised again by the fact that this is how some people get by in life. But i was outdone by recent news about a career jewel thief - an 81 year old woman - getting arrested AGAIN just last october, a few days after the release of a movie about her illustrious "career"! – Xavier J Jan 10 '14 at 17:14
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This may not be a "scam" per se, but it's certainly showing all the signs of being run by someone who is lacking in their communication, accounting, ethics, proper business practices, budgeting, business plans, and general common sense.

And for what it's worth, I think it IS a scam. This person has promised the world and given nothing, has attempted to manipulate you, put you off, dropped off the face of the earth for long periods of time (running away from his creditors, perhaps?) and on top of all that has asked on more than one occasion to BORROW MONEY FROM A CONTRACTOR. How could this NOT be a scam? The only scenario I can imagine where this is NOT a scam is the guy is a complete moron. I don't think someone could offer me enough money to be worth the risk in taking this person on as a client. I'd have bailed long before now.

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    Hey, I didn't think of the "moron" angle but I've run across that kind of person. Like this one -- I'm not joking: I met a guy who wanted a web site so he could sell A BLACK T-SHIRT WITH AN UGLY, GLITTERED-GLUED "G" ON THE POCKET, AND ADVERTISE ON THE SITE THAT THE GLITTER WAS 14 KARAT GOLD. They come in all forms! – Xavier J Jan 10 '14 at 19:58
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I'd be hesitant to deal with a potential client with no obvious business or home contact details and who has asked multiple times to borrow money!

...if it is a scam, what can be done to inhibit such actions?

As part of my standard terms and conditions, I charge a 50% up-front fee for projects. This is intended to cover my costs including domain registration, web hosting, software licensing, stock imagery etc and at least some of the expended hours.

The 50% up-front fee means clients take an equal stake in the project and would likely scare away potential scammers.

On lower risk projects where I know the client well, or the project is small, I sometimes waive the up-front fee to simplify invoicing.

  • I edited slightly the phrase quoted in your answer but it hasn't drastically changed the meaning. – authentictech Jan 11 '14 at 14:36
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    +1 Always ask for money up-front, and ask for a sum which is significant enough to guarantee the involvement of the client. – Sylvain Peyronnet Feb 2 '14 at 17:56

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