Business Banking Fraud

Nov 13, 2019

Industry News, Services

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There are several types of banking fraud that businesses can fall victim to. According to the world’s largest anti-fraud organisation, ACFE, small and mid-sized businesses are the most common victims of fraud. And the effects can be damaging. Here are some of the fraudulent methods used and what to do when in those situations.

Change of banking details scam

Fraudsters often pose as a supplier and request that you update your banking details with them. Beware of letters from your bank, as these can be forged. Your payment(s) are then made to the scammer instead of the actual supplier.

Here is how to identify and stop them before payment is made:

  • The request does not come from your usual contact(s);
  • The request for change is not made via official correspondence or using the contact details you have in your database;
  • Some fraudsters falsify the suppliers email address (make sure to open any emails in full to clearly see the email address in full that the email was sent from. Pay attention to any differences that you may notice eg. The email address is .com instead of the usual;
  • When received, phone your known and trusted contact and verify that the information is correct before making any payments;
  • Shred all business and supplier invoices or other material that contain letter heads, do not throw away or recycle them;
  • Ensure that your companies’ private information is not disclosed to third parties that are not entitled to the information as well as third parties whose identity cannot be suitably verified;
  • Do not publish your bank account details on your website, it can be used to deceive legitimate customers into making payments into alternative accounts.

Deposit and Refund Scams

This scam attempts to steal goods or services from your business without making genuine payments. Fraudsters order goods from you and supposedly making the payments into your account. Mostly done with fraudulent cheques. Fake proof of payments are emailed to you so be weary and make sure the money reflects in your bank account before releasing goods. In other instances, they may cancel the order and requested a refund. Lastly fraudsters can deposit a fraudulent cheque into your account, they then contact you stating it was a mistake and ask for a refund.

How to identify and stop them:

  • You are asked for an urgent refund after an order is cancelled or payments are made in “error’’;
  • You are asked for the urgent refund before you have time to verify with the bank that the deposit was made and is valid. Tell them you will need to verify the payment with the bank before any refunds can be made. If they get unreasonably upset, it is a red flag so make sure you are covered for this in your terms and conditions or any other information customers need to see before purchases;
  • You don’t know the person requesting the refund or struggle to verify them;
  • You aren’t sure whether the payment is a cheque deposit or not;
  • You are unable to reach the person by phone to confirm the request;
  • If there is a deposit (it might be the fraudulent cheque) but speak to the bank and request it be reversed (if the fraudster attempts to dissuade you of this and claims it must be paid into a different account, it’s a red flag).

Personal information theft

This is when fraudsters steal someone’s identity and pose as them to gain more information or misuses the position/authority etc. of the stolen identity. If it has happened to you here is what to do:

  • Report the crime to the police immediately;
  • Notify your bank, insurance companies and other relevant entities
  • Notify the South African Fraud Prevention Services (SAFPS) for assistance of ID theft (Help line: 086 010 1248). You assist them by giving them this information to track and stop fraudsters from continuing their thefts.

In a business environment the fraudsters usually assume the identity of a supplier as in the change of banking details scam.

Tips to avoid these situations

  • Always take your time and verify details of suppliers, especially when under pressure or at month end (unless the legitimacy of the notice is already verified);
  • Ensure that you are satisfied with the validity of supplier communications;
  • Where feasible, train employees in supplier relationship management procedures and how to recognize slight tweaks in all forms of communications;
  • If the fraudster (pretending to be supplier or customer) gets unreasonably angry and rushes you, stay calm and proceed at your comfortable pace, it may be a trick to distract you;
  • Do NOT click on any email links to change details or check banking details, this is where they can hack into your computer and get more information.
Contact Uphando Forensic and HR services if you suspect your business has or may fall victim to any of these situations or if you need assistance in preventing situations like these.

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