LEGAL ISSUES

Case Study: Delta Market Research

Scam artists hijacked the company's name to run a check-cashing scheme. So it decided to fight back.
An Innocent Man: Bob Norman found no one to turn to after discovering a scam perpetrated in his company's name.
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The Backstory

Delta Market Research has never been the kind of company to seek the spotlight. Based in Hatboro, Pennsylvania, a small town halfway between Trenton, New Jersey, and Philadelphia, the company conducts market research and gauges consumer opinion for businesses in a variety of industries, including newspapers and theme parks. It's behind-the-scenes work done by a behind-the-scenes company.

"It's our job to make our clients look like heroes," says Bob Norman, Delta's executive vice president.

In November of last year, Norman was asked to temporarily take the helm of the company while Linda Celec, Delta's president, took a leave of absence to travel to Florida to help her father recuperate from open-heart surgery.

Things were running smoothly at the six-employee company until December 19, when Norman took a phone call from a check-cashing firm in North Carolina. The caller said that he had a customer trying to cash a check for $1,450 issued by Delta Market Research. After explaining to the caller that the check was not valid (the check said the company and its bank were based in St. Louis), Norman hung up and shrugged it off.

Soon after, however, another call followed. And another. By month's end, Norman had received nearly 200 phone calls from all over the country, all dealing with the same issue.

The Problem

"After the first few calls, it was clear something serious was going on," says Norman.

After doing some investigating, Norman discovered that someone had apparently mailed out at least two series of letters to consumers that included the check, an instruction letter, and a questionnaire. The letter, which was printed on letterhead using the Delta Market Research name (though not the company's actual logo), explained that the reader was chosen to conduct market research on Western Union. The reader was then instructed to deposit or cash the check, spend $150, keep $300, and call an 800 number listed on the letter, where he or she would learn to whom to wire the remaining $1,000.

It wasn't exactly a sophisticated scam, and the good news is that the people who had gone to check-cashing establishments weren't out any money. What worried Norman was the untold number of people who might have actually deposited the check and wired their cash away. Because the check wasn't valid, anyone who wired his money to the scammers was going to lose his $1,000 and potentially blame Delta for the loss. Even worse, though, was the possibility that the company's name would be associated with the scam all over the Internet--something that would affect Delta's reputation and credibility with clients for years to come.

The Decision

After the first few calls came in, Norman and other Delta employees began contacting anyone they could think of, including their local police department, the Federal Bureau of Investigation, the state attorney general's office, the United States Post Office, and even Western Union. Unfortunately, each call ended in the same result: nothing. "My initial thought was that if we didn't start screaming about it, we could be considered complicit in this," says Norman. "But everyone kept telling me, 'You're not the victim here; what do you want us to do about it?' "

Norman even went so far as to call one of the 800 numbers that had been sent to the consumers. When a man's voice answered, Norman asked him, "Where are you?" The man replied that he was in the Bronx, New York. Norman hung up and called the New York City Police Department. The voice mail he left for the NYPD was never returned.

Although calls to the authorities proved fruitless, Norman's call to The Philadelphia Inquirer did not. Going public, he thought, was the best way to prove that Delta wasn't involved in the scam. He also hoped press attention might help spur authorities to step up their effort to catch the scammers. "Reaching out to the Inquirer was a calculated business decision," says Norman. The newspaper, which was a Delta client, eventually ran a story about the scam on January 8, 2013. Delta also posted a "Scam Alert!" message on its website encouraging anyone who received the letter to shred it immediately.

The Aftermath

As of mid-January, the deluge of calls slowed to a trickle. To date, only one call had come from someone who had actually deposited the check in his account. As far as Norman is aware, none of the scammers have been caught. But the good news is that an online search for Delta Market Research and scam yields mostly press reports portraying Delta as an innocent victim.

Throughout the incident, Norman was in daily contact with Linda Celec. Being out of the office during the whole fiasco was difficult, she says, but her team rose to the occasion. "I couldn't be happier with my staff for trying to protect the company's reputation and also trying to protect people from getting hurt," she says.

Despite the lull, Norman is still bracing for the worst, although he admits there is little the company can do other than deal with calls as they come in. He estimates that the company invested thousands of dollars' worth of lost time and productivity in fighting the scam. "We know there were at least two mailings and maybe a third," he says. "There could be people who deposited the checks and are only now learning they were scammed. If someone posts something against us on the Internet, how are you supposed to deal with that?"

***

The Experts Say...

Take the fight to them

Delta should consider hiring a forensics investigator who might be able to track the source of the crime. For a small company, the cost might start at about $5,000, but if Delta can find the perpetrators, it would have the option to seek an injunction in court and sue for damages from a claim of false advertising or unlawful business practices. The company should take the temperature of how the scam is working against it. If it shows up on only page 20 of a Google search, it might not be worth the expense of a lawsuit.

--Dominique Shelton
Partner at Edwards Wildman Palmer

Remain vigilant

The high call volume suggests that this is more than just a case of mistaken identity. I think going to the press first was a brilliant attempt to turn lemons into lemonade. The company didn't do anything wrong, and there is nothing to be ashamed of. Delta is going to need to be aggressive and stay on top of things, repeating its message over and over for at least six months. The situation shouldn't affect business with Delta's existing customers, but the company may have a harder time landing new clients.

--Michael Fertik
Founder and CEO of Reputation.com

Launch a social-media campaign

Delta should create a personal statement from the company president that expresses concern for the scam victims and includes phone numbers for the FBI and local police. Then post it on any social-media outlets the company has. Delta should also be actively monitoring social-media postings for any negative comments about the company. If Delta finds any, they should be responded to immediately. Delta could also alert websites that monitor scams about the fraud.

--Jane Blume
Owner of Desert Sky Communications

 

 

IMAGE: Cris Crisman
Last updated: Mar 1, 2013

DARREN DAHL

Darren Dahl is a contributing editor at Inc. magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, North Carolina.




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