Supplier payment fraud
The usual case of supplier payment fraud may come in the form of unsuspecting companies. Such companies will have undelivered legitimate claims due to payments being diverted to other fictitious companies. As simple as a mere e-mail can cost a company millions. For instance, ABC Company purchases goods amounting to RMB 10,000 from XYZ Company, and the goods were delivered. The purchasing office of ABC Company gets an e-mail telling them to make the check payable to XXX Company. Without confirming this with its supplier, ABC Company makes the payment. Only if XYZ Company reminds their customers of outstanding balances will ABC Company know that they were defrauded.
Now imagine this scenario happening to real-world companies, with amounts reaching millions of dollars’ worth of companies’ money. These days, payment through bank transfers are more convenient, which makes fraudsters’ jobs easier as well.
Fraudsters may be from within the company or those outside of it. They can range from your most trusted managers, people in authority, people with access, your staff, customers, or random people who wish you harm. In terms of supplier payment fraud, the victims are both the supplier who did not receive what is due to them, and the company who paid a fictitious or fraudulent company. The perpetrators may range from outsiders who merely had access to the e-mail of the paying company and manage to divert payment to them instead of the payee.
Business E-mail Compromise (BEC) is a scam scheme targeting companies who conduct wire transfers and have suppliers abroad. From April to May 2020, BEC attacks focused on invoice or payment fraud increased by 200 percent. Interestingly, this is the period when COVID-19 has slowed down in China but has sped up elsewhere in the world.
Fraudsters can impersonate vendors, suppliers, or customers to redirect vendor payments. The confusion that COVID-19 has caused, that is, questions such as “Will I get the virus?”, “Do I still have a job/business after this lockdown?”, “How do I know if I really am safe now or in the future?”, etc., has caused the majority of the world in a panic; and fraudsters are taking advantage of this.
The rationalization behind the act of fraud
Justifying fraud may come in different ways, but just a famous actress once said “Just because you can, doesn’t mean you should”. Just because fraudsters can get away with their actions, they do it for the sake of doing it.