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