Recent Fraud Scheme Targeting PEOs

Alert for all members in the PEO industry.

A company purporting to be Teak Transport out of Ohio has recently scammed or attempted to scam multiple PEOs across the United States. Please be vigilant in your prospect review process.

Here are a few basic suggestions to help you protect against fraud.

  1. Beware of prospects who are pressing you to provide your services (especially payroll only) ASAP.
  2. Take time to research the prospective client, the company, and the employees. Make sure to research the business entity with the Secretary of State where the business is located. Google is your friend.
  3. Require secured funds for payroll payments from new clients. Wire transfers are a commonly used method in the industry.
  4. Set up a call with the bank and the client (and get the contact information for the bank from a source other than the client).
  5. Consider requiring an up-front deposit or onboarding fee.
  6. Beware of prospects who are unwilling to participate in a face-to-face meeting.
  7. Pay card requests for an entire workforce are suspicious, too.
  8. Educate your employees on the process within your PEO on vetting prospects. Make sure to have a gatekeeper who monitors the prospects/new “clients” and understands the warning signs of suspicious behavior.

If you are a target of a scam, please consider making a complaint to the FBI’s Internet Crimes Complaint Center (IC3). IC3 ensures access to the complaints by all of the FBI’s field offices, which is important when victims are across the U.S. The website is www.ic3.gov.

Be on the lookout for further best practices from NAPEO. If you would like to discuss this or any fraud perpetrated against your PEO, please contact ffielder@napeo.org.

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