This is a guest post by Rémi Demont, the Co-founder & CEO of SiS-id
Fraud has disrupted businesses for centuries. In fact, fraud is arguably one of the world’s most resilient industries. This is as criminals continually adapt and diversify their methods to maximize fraudulent opportunities as the mechanisms that power businesses to evolve.
Today fraud is a billion dollar industry. In France alone, it generates an annual turnover of 500 million euros. And it shows no signs of abating. Criminals continue to invest huge sums of money to innovate and stay one step ahead of the methods curtailing their work. This ability to evolve is a big reason fraud is so pervasive and resilient.
Spotlight on fraud today
While fraud occurs in many ways, most fraud today is digital. Technology has transformed the way fraudsters operate. It’s given them the ability to launch attacks on every business on the planet from anywhere in the world.
According to 2019 AFP Payments Fraud & Control Survey, 82 percent of enterprises reported incidents of fraud in 2018. Forty-three percent of those experienced a direct financial loss because of it.
Many of these attacks begin with criminals hacking the email of an individual in a purchasing, accounting, or treasury department. But there is no end to their ingenuity. For example, it’s estimated that fraudsters create four new malware samples every second. Their methods of hacking will undoubtedly become even more intrusive as more and more technology is used in the workplace.
Technology has also enabled fraudsters to adjust the ways that they launch attacks. Whereas once they used a scattergun approach in the hope somebody would click a malicious email link in error, today’s fraudsters have grown more sophisticated. They’ve developed the ability to use all the data that lives online—not just portions of it—to conduct detailed research into their targets and build bespoke strategies for each of them.
They’re also more patient. Take this well developed scam, for example:
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A fraudsters will contact the Accounts Payable team and impersonate one of their sellers. They’ll request the contact information for that seller be changed in the Accounts Payable system. Then the fraudsters settle in and wait.
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A few months will pass and they’ll get back in contact with the Accounts Payable team by email. This time they’ll request the banking information for the seller they’re impersonating to be changed.
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To verify this, the unsuspecting Accounts Payable team will reach out to the seller using the number in the system which the criminals have already had changed to confirm.
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The fraudster will verify that they want the change to be made and from that point payments to the seller will be sent to the fraudulent account, potentially costing the company thousands of dollars.
Minimizing the risk
It’s impossible to mitigate the risk of fraud completely, even thinking you can is dangerous. There will always be a weakness somewhere, and mistakes will happen. That being said, there are plenty of tactics accounts payable can use to minimize the risk.
Education and communication are the most important. The digital world is complex and businesses are changing at pace. In times like this, it’s easy for individuals to lose a sense of their roles and responsibilities—and that’s when fraudsters sneak in.
So while technology is a powerful tool for businesses, individuals must remain accountable for how it is used and its outcomes. To ensure this, business leaders must train their people, many of whom are unlikely to be experts in technology, so they understand the system and the risks that exist.
How technology can help
In addition to being a problem, technology can also be a solution.. For example, we’ve developed the My SiS-id app for the Tradeshift app store. This app is a community-driven, blockchain-based platform that authenticates and secures banking payment contact details to create a tamper-proof, shared ledger of verified bank data.
The app reduces the time finance and procurement decision-makers have to spend making sure the right recipient is receiving payments, and that fraudsters haven’t cloned the identity of a supplier by up to 80%. Users of the My SiS-id app are further protected by insurance which covers them in the unlikely event that any transaction processed via the platform is subsequently revealed to be fraudulent.
An ongoing battle
Preventing fraud is among the biggest issues facing senior financial decision makers. It continues to place a huge burden on businesses and consume vital resources. It’s a complex problem and the only way to address it effectively is through education, communication, and businesses taking a collective approach. Fraud prevention isn’t an area business should compete, it’s an area they should collaborate on. By working together we’ll be better able to stay ahead of the criminals and mitigate the impact of fraud on the whole ecosystem.
Learn more about the app partners on our platform and what they can do for your supply chain.About the Author
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