A scam targeting drilling tool dealers is making the rounds, and businesses in the industry should be on high alert. What started as an isolated incident has now affected multiple companies, with fraudsters using different business names to place fraudulent orders and disappear with valuable tools.

One company recently encountered the scheme when a scammer placed an order for tools and then tried to convince them to pay a freight company via ACH transfer. Sensing something was off, the company reported the incident to the Federal Trade Commission (FTC). However, just a week later, another drilling supply business, America West Drilling Supply, fell victim to the same tactic—this time with a slightly different approach.

In America West’s case, the scammers used a credit card for payment. Initially, everything seemed legitimate, but when the company followed up, all phone numbers associated with the order had been disconnected. Soon after, the credit card payments were reversed, leaving the company with lost inventory and no way to track down the fraudsters.

These scams pose a serious threat to drilling tool dealers and manufacturers. By using different business names, disconnected phone numbers, and fraudulent payment methods, scammers are finding ways to take advantage of suppliers and disappear without a trace. With multiple companies already affected, it’s likely that more businesses could be targeted in the coming weeks and months.

Financial scams are a growing problem, costing people and businesses massive amounts of money each year. In 2023 alone, Americans lost over $12.5 billion to online fraud—a staggering 22% jump from the previous year. On a global scale, the numbers are even more shocking, with scammers stealing an estimated $1.02 trillion between August 2022 and August 2023.

How Can Drilling Tool Dealers and Manufacturers Protect Themselves?

To avoid falling victim to these scams, industry professionals should take extra precautions when processing orders, especially from new customers.

Here are a few steps businesses can take to protect themselves:

• Verify the customer’s identity – Research the company placing the order, check their website, and call listed phone numbers to confirm legitimacy.
  
  
• Watch for red flags – Be cautious of customers who insist on ACH transfers to third-party freight companies, use multiple business names, or provide disconnected phone numbers.
  
  
• Use secure payment methods – Credit card payments can be risky if the buyer disputes the charge. Consider requiring wire transfers from verified business accounts for large orders.
  
  
• Confirm shipping details – If possible, arrange freight through trusted carriers rather than allowing the buyer to handle shipping.
  
  
• Report suspicious activity – If you encounter a scam attempt, report it to the FTC and alert other businesses in the industry to prevent further fraud.