Imposter scams are one of the top three types of fraud in California. In 2024, the Federal Trade Commission (FTC) received more than 16,000 imposter fraud reports from Californians. While break-ins and smash-and-grabs are still very real threats to jewelers, phone-based impersonation scams are increasingly popular ways to defraud jewelry retail businesses and wholesalers.
Jewelers across the U.S. have become targets of phone-based impersonation scams, where fraudsters pose as shipping companies, customers, banks, or even fellow retailers. These social engineering attacks are often persuasive, time-sensitive, and deeply damaging.
“The proliferation of AI technologies has further exacerbated this issue, making it easier and faster for fraudsters to create convincing digital fakes,” wrote Heather Wishart-Smith in Forbes. “Companies and consumers often fail to detect these fraudulent sites quickly, leaving them vulnerable for weeks or months.”
How Do Phone-Based Impersonation Scams Work?
These scams often begin with a seemingly simple phone call. A “customer” claiming they entered the wrong shipping address, a “UPS rep” offering to reroute a package, or a “bank representative” trying to confirm a suspicious transaction are some of the strategies criminals use. The fraudster uses confidence and urgency to convince an employee to take immediate action—usually bypassing standard verification processes or security protocols.
Common tactics include:
- Providing partial order details to appear legitimate
- Asking for payment terminal access or approval codes
- Urging rerouting of high-value packages
- Citing emergencies to override internal protocols
Once the scam succeeds, losses can be devastating, both financially and reputationally.
Red Flags Jewelers Should Watch For
To protect your wholesale or retail business, you should know and train your staff to identify suspicious phone calls so you can prevent losses before they happen.
- Urgent Requests: Be wary of any call demanding immediate action without allowing time for verification.
- Caller-Provided Numbers: Fraudsters often provide call-back numbers that connect to a partner in crime posing as a vendor or bank.
- Incomplete or Generic Information: A legitimate business partner should know specific account or order details.
- Unusual Transaction Requests: Watch out for instructions to manually enter card numbers or override standard POS safeguards.
Best Practices to Outsmart Impersonators
While criminals are convincing, you can take steps to protect yourself and your business. Don’t fall for calls demanding immediate action. Take a breath and follow basic security procedures. If you don’t have such procedures in place, consider implementing the following:
- Always Call Back Independently: Use only phone numbers listed on the official websites of vendors, banks, and shippers. Never rely on a number provided during an unsolicited call.
- Verify All Order or Shipping Changes via Email: Confirm changes directly with the customer using an email already on file.
- Implement a Dual-Control Protocol: Require a manager or second employee to verify all changes to shipping or payment.
- Create a Standard Phone Verification Script: Train staff to respond professionally but skeptically, and to escalate any red flags immediately.
- Conduct Scam Drills: Like fire drills, simulate scam calls to keep your team sharp and responsive.
Jewelers Insurance: Your Last Line of Defense
Even with preventative measures in place, no jeweler or wholesaler is immune to fraud. That’s why having the right jewelers insurance coverage is essential. Specialty jewelers block policies can cover losses related to fraud, social engineering scams, and cybercrime. Some policies may also reimburse for stolen merchandise, rerouted shipments, and even customer notifications after a breach. It’s worth noting that you should also secure shipping insurance for shipping your valuable parcels.
If you’re based in a high-risk market like California, jewelers insurance in California can be especially critical in protecting your jewelry retail business from evolving fraud tactics.
Be sure to consult with an insurance provider who specializes in jewelry businesses and understands the risks of modern social engineering scams.
Conclusion
Phone scams may seem low-tech, but they are often sophisticated and highly effective. Training, vigilance, and verification protocols are your best defense against impersonators. For everything else, comprehensive jewelers insurance tailored to the jewelry industry can provide critical backup.
