A long firm is a business a group of criminals establishes with fraudulent intent. The operators of the business use it to establish credit and collect cash from customers, and then close the business and disappear, holding goods and funds from people who thought the business was valid. Long firms are less common than they once were as a result of increased scrutiny and the inevitable development of extensive paper trails, making it difficult for people to commit fraud without being caught.
People operating a long firm start with some steps to make the business look legitimate. They place orders with wholesalers and manufacturers, submitting prompt payments or paying up front to establish themselves as trusted and reliable customers. They also deliver orders to customers. The goal is to make a name for the business, making people believe it is an actual company and encouraging people to trust it and rely on its services.
Once the criminals are ready to execute the fraud, they take orders and cash advances from customers and turn around to order goods on credit from suppliers. The firm holds cash from people expecting orders for delivery and receives goods from companies expecting payoff of the credit. Once the firm has amassed as much as possible, the people running it take the goods and leave. They can hold the cash and sell the goods at a future date.
Long firm fraud is difficult for a number of reasons. People usually want to open firms under false names and with false information to make them harder to track, but this can be difficult when verification is ubiquitous; merchants will not extend credit to a company run by people who not appear to legally exist. The operators can use identity theft to establish the business under the name of a real person, but this can pose problems as well, because the victim may become aware of the theft and report it to law enforcement.
After people execute the fraud, they also need to find a way to unload the goods. This may be challenging when companies can send out alerts warning people about the fraud. A person receiving an offer to buy goods at an unusual discount might report the incident to the manufacturer, allowing for apprehension of the criminals. Likewise, customers defrauded by a long firm may be aggressive about reporting it to law enforcement when they can network with other people who were also victims of fraud and they realize they weren't the only people bilked by the long firm.