Protecting Yourself from Liars in the Factoring Industry

Factoring FraudIt’s no surprise to anyone in the factoring world that fraud is always a risk. If you ask any factoring company owner, it’s not even a matter of “if,” but, “when.” As much as we want to believe that all of our clients are honest and full of integrity, the truth is: some just aren’t. While most factoring companies go through very thorough measures in order to protect themselves, no business is completely immune. When there are hundreds and thousands of dollars at stake, what’s the solution? Unfortunately, there isn’t one—unless you want all of your potential and current clients to take lie detector tests—which probably won’t be great for future business. However, if you know what to listen and look for, it’s possible to avoid being scammed and defrauded in the factoring industry.

At this year’s annual IFA conference, guest speaker Greg Hartley, a former US Army interrogator, offered advice and insight about how to detect when someone is lying. “People generally lie for one of three reasons: love, greed or hate,” he says. “Most people are actually not good liars. However, few people have the skills necessary to detect when someone is lying.”

What makes a good liar?

Remember when you were a little kid and you were just experimenting with lying? I’d venture to guess that it didn’t go very well. Little kids haven’t had much practice lying, and even so, the stakes aren’t super high.

“Did you eat that cookie?”

“Who, me?”

“Yes, you…”

“It was the dog!”

“But we don’t have a dog…”

Now think back to a time you were lied to. Really lied to—as in, you fell for it—hook, line and sinker. What made the lie so believable? Most likely, the opposite of how you know when little kids are lying. People who are good liars tend to exhibit the same types of characteristics:

  • Smooth personality
  • Adaptability
  • Intuitive
  • The lie is based upon a partial truth

Additionally, there are different types of lies:

  • Omission – leaving details out – these lies are somewhat easier for liars to tell, as well as harder to detect , as they are generally based upon truth and just happen to skip over certain details in a story
  • Commission – twisting the truth to build a better story or more favorable version—these lies can be easier to spot as sometimes the liar forgets which version of the story he has previously told.
  • Embellishment – expanding upon a truth or making a story bigger

Because the stakes are often higher than cookies in business, especially the factoring industry, learning a bit more about how to detect lies is useful knowledge. See below for some further tips on how to spot a liar!

Prepare Yourself

Do your research and get to know as much as you can about the client you believe to be deceiving you. Find out personal details, other clients they are working with, their current financial situation or any type of information that might give you the upper hand. Knowing personal details can be helpful when trying to establish the client’s ‘baseline,’ or what their normal behavior is. For example, asking control questions (ones you know the answers to: What the person’s spouse or children’s name, for example) you will get to see how your client acts when you know for certain he is telling the truth. Therefore, when you start to ask him questions in which he might be lying, you will notice signs of divergence. Did he roll his eyes downward or upward? Did he shift in his seat? Did he clear his throat or exhibit any other type of tic? Anything that veers from his baseline could signify that he’s not being truthful.

Look for other signs of nervousness:

  • Pale skin; possible sweating and/or dry spittle around the mouth (this can be a symptom of the fight or flight response)
  • Tension
  • Shallow breathing
  • Other baseline deviations: tone of voice/pitch, cadence, eyebrow raise (often signifies a request for approval)

Know How to Control a Meeting

Whether we realize it or not, we each take up a certain amount of real estate during meetings. By understanding how space works and how we can effectively control each other’s space, it’s easier to maintain authority in a face-to-face meeting.

Hartley mentions in his book, “How to Spot a Liar,” that “in a large meeting that you did not call, sit on the same side of the table as the person in charge or who called the meeting, ideally right next to them.” He says that by doing so, the person is far less likely to be confrontational, as you have associated yourself and aligned yourself with their authority. If you did call the meeting, standing or sitting directly in front of someone can establish power. “Your role is not to reduce conflict, however, but to manage it so you can do a power play,” says Hartley.

What if the meeting is not in person? Many times conversations take place over the phone, rendering it difficult but not impossible to pick up on the easiest, visual cues that someone is lying. The same types of tactics can be used:

Ask clear questions that require detailed explanation—not just yes or no questions. Ask control questions throughout the conversation so that you can ‘baseline’ throughout the exchange. For example, a person who slows down their speech pattern compared to how they normally speak can mean a person is thinking through something they shouldn’t have to.

Use silence to your advantage – silence can be extremely uncomfortable, especially for someone who might be uncomfortable already. Ask a question that requires narrative and then wait. Most likely, the person will eventually start talking. Additionally, because they know they’re hoping to deceive you, you might catch details that don’t add up.

Ask the same question multiple different ways—this is a good way to tell whether or not your client’s story remains consistent.

Pay attention to their answerdo they distance themselves from the original question? Do they repeat the question (maybe they need more time to think of the ‘right’ answer). Perhaps they take the moral high ground, “I’ve worked here twenty years! I could never do something like that!”) or re-direct to an earlier answer. Another tactic is conditioning: answering the question without really answering it: “What time were you at work until last night?” “Oh, I had to stay late to finish up some things.”

Change the diction and pace with which you ask questions –by asking multiple questions in a row, your client might become frustrated and blurt out answers. Garnering an emotional response can give you control or the upper hand in a confrontation.

Factor Finders Factoring Broker Program

No doubt, unless you’re a trained professional, it will still be very difficult to tell if a person is lying, especially if they are a good liar. While most of our clients are good, hardworking people, and hopefully you won’t need to use these tips, there’s always at least one experience that will change how you look at the factoring business forever. The most you can do is prepare yourself as much as possible and try to do as much damage control as you can before it gets really bad. For more tips and in-depth information on lying, check out Greg Hartley’s book, “How to Spot a Liar.”

In our next article we’ll cover resilience and what to do if you do get scammed! Tune In!

About the Author: Factor Finders specializes in finding factoring companies that can fund difficult-to-place deals. Our services help other factoring brokers capitalize on commissions that might otherwise be lost.

If you have a prospective transaction that you cannot find a funder then contact us at FactorFinders.com. We’ll find the factor for you and split commissions 50-50.

Comments

  1. also good advice for every day

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