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fake-invoice-fraud

Large complex financial systems: a fraudster's paradise

False invoices and orders are the most common form of external fraud. Every entrepreneur is familiar with the relatively small invoices they receive for supposedly standard services that were never provided. But these are not to be taken lightly. False invoices can cause major damage.  

A (fictitious) example: 

A pharmacy chain paid false invoices for undelivered goods for years. For years, false invoices arrived via a hacked e-mail box from a major supplier. The amounts were transferred to a foreign bank account. This practice was able to go undetected for so long because the false invoices were indistinguishable from the "big flow". The amounts were limited and the invoices were sent scattered throughout the year.

Large companies are often the target of this type of fraud, as their complex financial systems allow fraudsters to go undetected. In total, losses exceeded 250,000 euros. As the fraud case was widely publicized, it was not only the financial damage that was suffered, but also the company's reputation.

How can this situation be avoided?

  • At first glance, false invoices and orders appear to be completely reliable. It is only in the details that any discrepancies can be detected. All kinds of measures can be taken to trace them in time.
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  • Train your employees to recognize suspicious orders or payment methods. Employees should also know what to do if they suspect an order is fraudulent.
  • Check new customers as they arrive. Check company and personal details and (in the case of a large order) also check the company's financial history.  
  • Double approval: always ask a second person to approve large orders or orders from new customers internally.
  • Use automatic fraud detection software (think ai solutions, for example). This software records suspicious orders or behavior. Aberrant patterns are recognized, such as unusual order quantities, unknown IP addresses or locations that do not match known customer data.
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Nearly 85% of fraud attempts are successful

Most of the frauds faced by businesses are false invoices. False orders are also in the top three. These are the findings of Allianz Trade's annual fraud survey.

The latest survey shows that only 16% of external fraud attempts (of which false invoices and orders make up the majority) are detected in time.

Nearly 85% of attempts are therefore successful. In almost 40% of cases, the loss amounts to between €1 and €50,000, in 17% of cases between €50,000 and €100,000 and in 13% of cases between €100,000 and €200,000.

How can you protect your business?

Of course, it makes sense to take solid preventive measures (see paragraph: How can this situation be avoided?). But even so, the risk of internal fraud remains. There is no such thing as zero risk. To prevent your company from incurring significant losses, Allianz Trade offers fraud insurance that can be tailored to every type of business.

What does Allianz Trade's fraud insurance offer?

With our fraud insurance, you limit the financial losses caused by both external and internal fraud. We compensate most of the loss. Loss of reputation is also covered. What's more, you can count on expert advice to help you avoid fraud.

No company is immune to fraud!