Bust-out

A bust-out scheme involves establishing credit, using the maximum amount of the credit, and then not paying the bill. For example, a common practice for the credit department of a business is to grant small amounts of credit to newer customers, and then gradually build up the amount of credit allowed when there is a history by customers of paying on time. Someone can take advantage of this pattern by setting up a business, placing small orders, and paying the resulting bills within normal terms. At this point, the credit manager is more likely to allow credit for a much larger order. The perpetrator then accepts delivery, shuts down his business, and moves away – without paying the bill. The goods are then liquidated for cash.

A variation on the concept at the consumer level is for an individual to obtain a credit card, use a consistent payment history to justify a higher credit limit, use all of the credit limit, and then not pay the credit card bill.

The process can also work in reverse. The perpetrator sets up a company and begins offering goods at excellent prices, but only when payment is made in advance. Once customers become comfortable with the arrangement, the company offers exceptional pricing for a short period of time in order to attract even larger orders, takes the prepayment money, and walks away from the business.