Fraud on the Rise with Fake B2B Invoices

With the rise in B2B invoice scams, where fake invoices are being sent to companies, appearing as if they are coming from their suppliers, businesses are worried about security issues. Fraudsters may even inform a business that one of its suppliers has changed its banking information, directing the company managers or owners to transfer the funds to that new bank account.

Governments across countries are warning companies who deal in B2B payment processing against such B2B invoice scams in public service announcements. To solve this issue, the US Government, under Title 39, U.S. Code, Section 3001, makes it illegal for any supplier company to send solicitation mail in the form of a bill, invoice, or account statement due unless it bears a conspicuous notice on its face that it is nothing but a solicitation.

In this case, the disclaimer must be written in very large type (at least 30-point) and boldface capital letters. Further, it must also be given in a color that contrasts with the background it appears on.

How Is It Happening?

According to the Federal Bureau of Investigation reports, B2B invoice scams have increased significantly in the past few years. Victims majorly report wire transfers being used as common payment methods for transferring business funds. However, some victim businesses also report check usages as a common payment mode involved in B2B invoice scams.

This means that the fraudsters will use the standard payment options that businesses normally use. Sophisticated invoice scams are often known as Business email compromise (BEC) that targets businesses who work with foreign suppliers or companies performing wire transfer payments regularly.

Invoice scams are done by compromising legitimate email accounts associated with a business through various computer intrusion or social engineering techniques for transferring funds illegally.

As per the FBI reports, invoice scam cases have been reported in all the 50 states in the US. Moreover, unauthorized fund transfers are reportedly being conducted across 72 countries, a majority of which include Asian banks in China and Hong Kong. The scam has caused a loss of billions of dollars for businesses in the States.

However, you might be shocked to hear that the person responsible for these fraud are not always outsiders, but your own internal personnel may also be involved. PYMNTS, a powerful B2B platform and premier information source in eCommerce and payments, after examining recent invoice scam cases, finds that employees are falsifying invoices and checks to steal money from their employers.

Most businesses are at high risk of facing cybersecurity issues, like BEC scams, in which fraudsters are often seen to spoof authorized business email addresses from vendors and then directly sending them payment requests.

According to the recent report from Naked Security, an award-winning cybersecurity publication of Sophos, a New York company lost $6 million due to invoice fraud.

In a recent incident in India, a fraudulent party used two different PAN cards using which 14 companies were created. 35 other firms are created by stealing and using the KYC documents of common people. The Anti-Evasion wing under the Central Tax department in India reported that the person created all these 297 firms to use them for fraud banking transactions.

AP Automation Comes With Fraud Protection Schemes

Accounts Payable automation imposes stringent laws for businesses that must strictly adhere to company rules and policies in an attempt to reduce B2B fraud. Unlike manual processes that rely on reviewing and detecting business rule deviations post-payment when the fraud has already been committed, an AP automation ensures your company’s payment information and invoices are secure within a cloud-based environment.

The best part about accounts payable automation is that your confidential payments information is not only stored safely and securely but also can be accessed anytime and anywhere. Your company needs a solution that automatically detects fraud, such as invoice scams or duplicate payment requests.

How to Prevent B2B Payments Fraud?

Companies can start doing the following things to prevent invoice and email scams.

●     Check on Suppliers

It’s always safer to check with your supplier or vendor whether it has really sent you the invoice mail, especially if it’s a new one. You can quickly do a Google map search to confirm if the contact details and address given in the mail is correct. Also, when the payment information is changed by your supplier, always check with them, and if possible visit their offices.

●     Implement Multi-Step Verification or Matching

You must employ multi-stage authorization, especially if the amount to be transferred is huge. If possible, try to match each invoice associated with a purchase order and verify it with the receipt of ordered goods. This will drastically reduce the chances of fraud invoice scams because most fraudsters won’t take the pain of fabricating 3-4 documents.

You can also opt for solutions having robotic processing and 3- or 4-way matching techniques. Also, try to employ more heads (‘eyes’ to be precise) in the checking and rechecking procedure because it can save millions of business money.

●     Track Invoice Activity

If you have been checking and approving invoices for a long time, you will know if the number of invoices generated increases suddenly. Check with your vendor immediately to ensure those are accurate. Some fraudulent even send duplicate invoices that closely resemble all your regular orders. Closely monitor such activities.

●     Use Automated Solutions

Automation eliminates email fraud and BEC virtually and offers extra protection against other kinds of fraud as well. Incorporate an efficient invoice automation solution that can automatically detect fraudulent invoices, thus cutting down your invoice processing costs.

Moreover, payment automation can also reduce the number of checks issued by converting your payments to a more secure transaction mode, including ACH and virtual cards. With invoice automation solutions, you can also set automatic reminders or alerts for specific amounts or transactions.

●     Triple Check Information

Suppliers often pressurize companies to release the payments as soon as possible. However, for your own safety’s sake, never feel pressured when you see notices like “URGENT ATTENTION REQUIRED’, or ‘APPROVE IMMEDIATELY', and make it a habit to triple check or even cross-check every bit of information before transferring the funds. Never approve any payment before making sure that it’s genuinely your supplier sending the invoice.

Conclusion

In short, beware of such fraud payment requests and implement strict policies to protect your valuable business funds. Use an invoice automation system to detect any fraud invoices or payment requests and save your business from losing valuable funds!

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