A new financial scam is unlocked! Fake invoice scam is one of the most underrated scams that people bluffed easily in its trap. It is a payment fraud tactic that most of the companies have been victim to so far.
Read this fake invoice alert guide till the end to know everything about this prevailing scam out there.
What is a Fake Invoice Scam?
An invoice is a primary source document to register an income or an expense in the books of accounts. Accountants rely on invoices only for receipts and payments. But beware of fake invoices! A new scam is found wherein some fraudsters send fake invoices to companies and request them for payment.
At first glance, such invoices appear legitimate containing all the essential details of the original vendor. However, fraudsters change the address and essentially bank account details. Often fake invoices insist on urgent payment because they don’t want to give time to accounts payable departments to suspect any amiss.
Large organizations are at higher risk for such frauds because a bigger team has larger communication gaps between accounts payable and procurement departments. Fraudsters know very well how to take advantage of this.
Another way to commit fraud is to gain unauthorized access to a vendor’s personnel email account. This way they take entry to the email thread and add their unverified payment methods like Google Pay or Bank account. This is called Business Email Compromise (BEC). Usually, such emails contain time-sensitive payment requests to give no chance for the vendors to sense any felonious act.
How To Identify Fake Invoices?
Among hundreds of invoices daily, it is quite tricky to identify fake invoices. This could be even more difficult when the process is manual. Checking and verifying every single detail on all the invoices daily is certainly not possible. To help you out with these, we are giving you some common red flags to check whether the invoice is genuine or not.
Check Contact Information
Contact information is the first and foremost thing you should check in the invoices. Big business houses change contact information rarely. Usually, they keep contact information intact. If you observe any change in the contact information without notice or an official update, it can be a red flag and fraud alert.
Check Bank Account Information
Bank details are even more crucial. Businesses usually stick to one bank service. They do not keep on changing. On the contrary, fraudsters use new bank details every time to catch prey. So, carefully pay attention to the bank details and mandatorily match them with the previous invoices from the same vendor.
Different Invoice Format
The third thing you should check is the format of the invoice. Big businesses use particular invoicing software that follows a standard invoicing format. If you see any invoice with a different format, consider it as a red flag and verify the picture behind it.
Unrendered Services
This is a clear indication of a fraud call. If you find any invoice in your records that is for a service yet not rendered by you, it is a clear red flag. You won’t issue any invoice for the services that you do not render.
New Clients
For new clients, we would suggest you check all the details, even the minute ones, thoroughly with the purchase orders and proformas. It is very important to verify and check all the details for a new client as it would also help in future endeavors.
Outsource Invoice Verification Work
For big companies, this works best. If the volume of invoices is high, companies may outsource the work of verifying the correctness and authenticity of invoices. However, companies make sure that privacy, confidentiality, and secrecy of the information shared are maintained and not compromised.
Remote Operations
In case, your payment methods and processing systems are set up remotely, make sure you call for the supporting documents, say purchase order or bank statement. Instruct your employees to process the payments after confirming twice.
Conclusion
Businesses are adopting modern technology and so are the fraudsters. Fraudsters are also upgrading and adopting modern techniques to fill their pockets. Invoice frauds are increasingly reported and this fraud protection guide assists you in safeguarding yourself from being the victim of such frauds. Share with your fellow businesses as well to save them from such frauds.
