Brexit Raises The Stakes For B2B Payments Fraud

Nacha is issuing a warning to accounts payable professionals with regards to the rising threat of fraud. In a recent announcement, Nacha said that a survey it conducted in collaboration with Blueflame Consulting and Research revealed the accounts payable department’s growing exposure to fraud risks, the result of challenges in maintaining and verifying data, vendor on-boarding, and other manual tasks. Further, Nacha said, the survey revealed AP professionals are facing increasing fraud attempts that target AP processes specifically.

“While current fraud tools are helpful, there is no systemic or automated option for accomplishing this,” Nacha warned.

But accounts payable is far from the only back-office financial workflow at risk of fraud. In this week’s B2B Data Digest, PYMNTS breaks down the numbers behind the latest cases of fraud, including the growing risks of small business loan fraud, a case of expense fraud, and the ever-persistent Business Email Compromise risk intensified by Brexit uncertainty.

Six months in prison will be served by the CEO of a children’s apparel company after being found guilty of invoice fraud, a notice from the U.S. Department of Justice revealed. According to the DOJ, the CEO was involved in a scheme in which the executive intentionally understated the value of goods on an invoice in order to avoid custom duties owed to the U.S. Customs and Border Protection (CBP). The DOJ accuses the individual of fraudulently invoicing more than $1.5 million in customs costs. The invoices were related to merchandise purchased from a manufacturer in China, and the scheme reportedly involved the apparel company receiving two invoices from the manufacturer: one was a pay-by invoice that reflected the actual cost of goods, and the second was the invoice presented to the CBP that reflected fraudulently lower costs.

$577,577.63 in restitution must be paid by an individual sentenced for expense fraud, according to a recent notice from the U.S. Department of Justice. The DOJ said in its announcement that the individual, a former billing and payroll clerk, has been sentenced to 36 months in federal prison for the scheme in which she falsified expenses to be paid directly into her own account by altering her weekly T-Chek reports. Her job required her to use the T-Chek system to pay for expenses incurred by truck drivers, but the individual reportedly altered the reports so that reimbursements would be paid to her personal bank account.

$2.56 million was recovered by the Bank of Ireland’s fraud team after an attempted business email scam in the second half of 2020, the bank said as it issued a new warning to businesses. Brexit-related business email compromise scams are on the rise, according to the Bank of Ireland, as more fraudsters pose as legitimate executives or suppliers in an attempt to redirect invoice payments to their own bank accounts. In another case, the Bank of Ireland intercepted a $1.34 million business email scam. “We know that fraudsters thrive in periods of change or uncertainty for business, where attention may be focused on other priorities,” said Bank of Ireland head of fraud Edel McDermott in an interview with the Irish Times. “Brexit will bring considerable change to many companies, including new procedures relating to customs of changes in arrangements with vendors or customers. Business email fraud at any time has the potential to have a devastating impact on business.”

$350 billion worth of digital small business lending will reach the India market by FY2023, according to the Reserve Bank of India (RBI), but officials are cautioning small businesses that are seeking financing via online platforms. In a warning, the RBI said that small businesses are particularly vulnerable to digital lending fraud, with the government urging small business owners to verify the lenders’ validity as the number of industry players vowing to offer hassle-free financing via web and mobile portals grows. In response to growing fraud complaints, the RBI has now required bank and non-bank lenders to list the names of the third party FinTechs whith which they’re working in an effort to boost transparency and reliability for small business borrowers, the Financial Express reported.