Cracking the credit conundrum
Nov 2015 | Fraud detection | Fraud Prevention
By Posted by Sarah Rutherford

Invoice fraud has become a sophisticated enterprise

Fake invoice fraud occurs when fraudsters submit an invoice, or other request for payment that is not genuine in the hopes that your business will pay it.

It is hard to quantify how much is being lost to this type of fraud, however the reports that are available suggest it is a growing problem and there are frequently large losses. The FBI’s Internet Crime Complaint Center (or IC3) issued a report saying that from Oct. 1, 2013 through Dec. 1, 2014, it received complaints about this scam from every U.S. state and 45 other countries, totalling 1,198 American victims who lost a combined $179,800,000, and 928 non-Americans who lost a combination of non-U.S. currencies worth $35,220,000 – worldwide losses across 46 nations totalling $215 million in 14 months.1

Meanwhile, in the UK, CIFAS have warned that reports of fake invoice scams targeting businesses have rocketed with 749 businesses reporting falling victim to this type of scam to Action Fraud between January and June 2015 alone. In comparison there were 603 in the whole of 2014 and 739 in 2013.2

Invoice fraud can be committed with varying levels of sophistication, in its simplest form the fraudster simply submits an invoice to your business and hopes you will pay it. As the invoice is unlikely to bear any relation to your actual suppliers or your purchases this should be relatively easy to spot.

At a more sophisticated level fraudsters use various techniques to obtain information about your company and your suppliers so that they can submit demands for payment that are more credible. Cybercrime techniques deploying hacking and phishing can be used to either directly access information or give the fraudsters the appearance of being part of your company. For example they might send an email that looks like it’s come from one of your employees that either requests payment or requests information that makes their fraud more believable.

Another tactic that may be deployed involves social engineering.  Fraudsters may contact your staff in order to obtain further information or to push the case for payment.  They know the times when you’re likely to be busy or less alert, for example, Friday afternoons are a busy time for companies involved in property sales, so that’s when they’re likely to ring. For other businesses they understand that you may have a reduced number of staff or less experienced, temporary staff during the summer months.

The additional information gleaned through these methods means that the fraudsters can submit more convincing invoices that look like they come from your genuine suppliers and are for products or services you actually purchase. Another technique this level of knowledge allows them to deploy is to submit a request for change of bank account details. With letterhead that looks convincing like that of your genuine suppliers they will write to tell you that you need to update your records with their new bank account details. Of course the new details are those of a fraudster and when you think you are paying your genuine supplier the money will unfortunately end up with the scammers.

Invoice fraud has become a sophisticated enterprise that can have more than one stage and present in different forms that are not always easy to spot.

Bank Wizard Absolute has been developed as a tool in fighting invoice fraud, by checking that the bank accounts you are paying into belong to your genuine supplier you will be able to keep your business safe..

1. Federal Bureau of Investigation, Public Service announcement Jan 22nd 2015 alert no: I012215-PSA
2. – CIFAS, statistics to June 2015