3 Common types of invoice fraud to watch out for

Invoice scams are a significant and growing threat to businesses with the value of fraud in the UK reaching £2.3 billion in 2023, a 104% increase to 2022. Fraudulent activity often results in financial losses and compromised sensitive information leaving businesses vulnerable as fraudsters are continuously creating sophisticated means to con businesses. Cyber fraud is a significant emerging threat when it comes to fraud, with 61% of all fraudulent activity now being cyber based. 

Let’s help you protect your business from cyber invoice fraud. Here are three common types of invoice scams to watch out for:

1. Phishing Invoices

Phishing invoice scams involve fraudulent emails designed to look like they come from legitimate suppliers or service providers. These emails often contain fake invoices and ask the recipient to make a payment to a fraudulent account.

Key Indicators:

• Unfamiliar Sender: The email comes from a supplier or company you do not usually do business with.
• Urgency: The email emphasizes urgent payment creating a sense of panic – you may be inclined to rush to make payment without checking it out thoroughly.
• Errors: Look for spelling and grammatical errors and discrepancies in the email address (e.g., a slight misspelling of a familiar domain).

Prevention Tips:

• Verification: Always verify the invoice details with the supplier directly using previously known contact information.
• Training: Educate employees about phishing scams and how to recognize suspicious emails.
• Email Filtering: Use email filtering tools to block potential phishing emails.

2. Business Email Compromise (BEC)

BEC scams involve hackers gaining access to a company’s email accounts and using them to send fraudulent invoices to employees or suppliers. The goal is to trick the recipient into making payments to the hacker's account.

Key Indicators:

• Unusual Requests: Requests for payment changes or new payment methods, especially if the email tone or language seems unfamiliar.
• Altered Account Details: Sudden changes in bank account details or payment instructions.
• Known Contacts: The email appears to come from a known contact, but the request is unusual or unexpected.

Prevention Tips:

• Two-Factor Authentication: Implement two-factor authentication (2FA) for email accounts to enhance security.
• Verification Procedures: Establish a protocol for verifying any changes in payment instructions directly with the supplier or internal requester.
• Monitor Email Accounts: Regularly monitor email accounts for unauthorized access or unusual activity.

3. Fake Supplier Invoices

Scammers send fake invoices hoping that busy accounts payable departments will process them without verification. These invoices often resemble those from legitimate suppliers but contain fraudulent payment details.

Key Indicators:

• Unrecognized Suppliers: Invoices from suppliers that your company does not do business with.
• Generic Descriptions: Vague descriptions of goods or services, making it hard to verify the authenticity.
• Suspiciously Small Amounts: Invoices for small amounts, which may not attract as much scrutiny.

Prevention Tips:

• Vendor Approval Process: Implement a strict vendor approval process and maintain an updated list of approved suppliers.
• Invoice Verification: Cross-check every invoice against purchase orders and delivery receipts.
• Internal Controls: Establish robust internal controls, including multiple levels of invoice approval.

Next steps…

Does your business use invoice automation software? Here at Pegasus, our Accounts Payable Automation software can help prevent invoice fraud with lots of handy features including 2 step invoice verification, duplicate invoice checker and Optical Character Recognition (OCR) and Artificial Intelligence (AI) to monitor and predict invoice activity. 

Take steps today to protect your business from invoice fraud. To learn more please contact us today to discuss your requirements or to receive a no obligation demo. 

Posted On: August 08, 2024