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Scam Alert: The Business Mole

The business mole scam is by far one of the most dangerous and costly scams in China today for small business owners especially if you are in the technology, investment, financial services, or B2B industries.

Although we all know about IP theft issues experienced by large multinationals, the mole scam targets mid-size and even small promising start-ups. If no precautions are taken, it can put you out of business in less than six months.  There is a short- and long-term version of this scam, but in general they work like this.


The Short Version

As a business owner in China you will be hiring local employees. Even if you delegate them to what you consider to be “safe”, low access positions, you are still vulnerable. Why? Because competitors have traditionally found it more cost-efficient and quicker to copy rather than create, especially if you have a coveted client list.

They watch when you advertise for open positions or will send a “walk-in” with a resume to your company casually inquiring about available jobs. Personal Assistants to executives are the most cherished positions.  If hired, they will be a diligent worker for a few weeks to gain your trust and confidence.

Within 90 days however they access your computer network and install new low-profile key-logger and Trojan software that is undetectable by most commercial products like Norton, Kaspersky, etc.  They also search out and copy client files that are then relayed to their primary employer – your competitor. Some may even sell the stolen data to two or three different competitors if they are a lone rogue mole as about 10% prove to be.

Within another 3 months they will find an excuse to quit, perhaps claiming they have to return to their hometown to attend to an ill parent. Before they leave, however, they will  implant a worm virus on your network set to self-launch within 30-90 days, long after they are gone and you have forgetten about them.  One day you will sit down at your desk and realize in horror that the data on your hard drive has either been eaten by the worm or encrypted with 256K byte technology that will take you six weeks and up to $50,000 to recover.

This move creates administrative havoc within your office as your competitors calmly solicit your clients with pricing that is maybe only 10% less than yours. Remember they stole all of your quotes and email logs as well.


The Long Version

The long term version may run for more than a year or two as business intelligence is quietly cultivated and spyware installed in your conference room and executive offices (hidden bug microphones) as well as spyware installed on any unattended mobile phones. This software is readily available on line for $200 and even a 12 year child can install it in less than 10 minutes.

This commercial spy will become more trusted and embedded in your operations collecting two pay checks.  You may never know until it is two late when you suddenly lose all your “whale” accounts at one time and you simply cannot understand why.  China Scam Patrol and International Recovery Service has investigated and confirmed over 136 cases of this scam just in 2011 alone with estimated losses of over $70 million USD. 12 hidden bugs were even found in the personal vehicles of company Presidents/CEOs/CFOs.

If you don’t think this is big business in China, just Google “corporatespacespies” and see what happens. And although most business owners insist that this cannot possibly happen to them, the facts speak otherwise. No business is immune.

Even non-employees are used in this scam like ostensible telephone company technicians, building inspectors, and even cleaning personnel--all bogus thieves who only need to access your office for less than an hour. Even your IT contractor can be bribed for the right price.


How To Defend Yourself

How to defend against this scam?  It is tough indeed without becoming paranoid. Here are the top ten tips used by the MNCs:

  1. Never keep your client files and most sensitive data on a network, only on your own encrypted USB or portable hard drive, and do not give the password to anyone who does not have your absolute trust.

  2. Let China Scam Patrol or IRS-Asia perform a discreet free risk management & integrity review with your president that will take about an hour, and let them sweep your office for bugs. They will also give you a free Black List of over 15,000 known scammers when they visit so you can check all new hires and sub-contractors in the future.

  3. Buy an external hardware firewall like Barracuda or Watchguard and do a professional deep scan of your network

  4. Truly and diligently verify the resumes of all job applicants.

  5. Casually ask all new job applicants if they are willing to take a polygraph test prior to being hired. If they refuse, keep interviewing.

  6. Hire as many newly-graduated university students as possible as most are too young to have been recruited and corrupted yet, although we feel this may be changing soon.

  7. Never let any service technicians from the phone company, building and safety inspectors, fire extinguisher inspectors, or even your own IT technician stay unattended in your office for any length of time.

  8. Install 3-5 phony or real ceiling-mounted cameras in your offices near computer as both a deterrent and enforcement measure.

  9. Install a smartcard or biometric access device to any high-sensitive area that must be kept highly-secured and locked up even when you make a visit to the wash room or take a smoke break in the hall.

  10. Register to attend a free Corporate Risk Management & Fraud Prevention seminar this month sponsored by IRS-Asia (info@International-Recovery-Service.com) and China Scam Patrol.

To identify yet other business scams that very well-disguised, visit www.CleverChinaCheaters.com and scroll down to the Commercial Business Blacklist which is the largest International Black List in the world today.

Each week, City Weekend will feature one scam alert from the China Scam Patrol. If you have a scam to report, let them know in the comments below.


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78987's picture


There are no shortage of scams and thieves in China for sure. But this scam is so devious and...evil. I'll bet a lot of people get ripped and don't even know it for months - if at all. BTW... that CleverChinaCheaters.com web site is unusual, but long overdue.
professor_phil's picture


Its about time someone focused a spotlight on these shady biz thieves. Two of my friends were defrauded exactly like yu describe but their moles were recruited from a "job fair" sponsored by the Chinese government. One mole was caught after six months but the other was siphoning confidential client lists and job bids for three years before he just didn't come to work any more and said he moved to Shanghai to get married. Both of my friends were hit hard and one folded in disbelief at how he was robbed by one of his own employees - a 27 year woman who flirted her way into his confidence. I think the only safe business for a foreigner to own in China is a restaurant or bar. MAybe about six months ago I had a bar debate/argument with an engineer from Sinopec and with a straight face he told me "Business is like a war and it don't matter how you win the war, so long as you win." He also suggested that the majority of foreign bussinessmen in China are "dummies without a clue who deserve to be cheated". I'm damn glad I am just a university professor.
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