Financial fraud is becoming an epidemic. Businesses are facing sophisticated scams, some of which use artificial intelligence. But could artificial intelligence itself emerge as the best line of defence?
Invoice fraud, a type of business email compromise (BEC), is surging. According to UK Finance, it is growing at an alarming rate of 130% annually. It cost businesses in the UK over £90 million in 2018 alone.
Despite this, it’s a hugely underreported and misunderstood issue, with 4 in 10 businesses unaware of the risks invoice fraud poses.
It can affect any size or type of business. Recently, the tech giants Facebook and Google fell victim as they lost over $100 million in an invoicing fraud scam, but it’s not just the big payers being affected – more than half of UK businesses have had an invoice fraud event, with the average loss to SME’s being £28,000.
It’s crippling small businesses and embarrassing the big ones.
These volatile scams are becoming prominent as more and more businesses rely on digitalised processing of payments.
Invoice fraud depends on staff not being vigilant. Through phishing techniques, fraudsters can gain passwords for business and personal emails, from which they can trawl through your accounts looking for sensitive information, getting insight into a business’ invoice process in order to exploit weaknesses.
Once the scammer has done their research, they intercept an invoice, simply changing the payment details, with the business then paying into the fraudsters bank account unknowingly.
Another method is when the fraudster requests payments through a spoof email, posing as the CEO. For instance, ever so slightly altering the email address from John.Snow@payments.com to John.Snow@paymnets.com, is a common tactic. The most subtle of differences are hard to catch.
It really can be that simple and it’s costing businesses millions.
Unfortunately, even though everyone may be at risk, options for defending your company against such malignant threats are limited.
However, technological advances in machine learning are finally supplying businesses with the protection they desperately need.
Online payments expert, Firdaus Mogul, founder and CEO of Check an Invoice, an innovative invoice fraud detection platform, warns of the risks invoice fraud poses to companies and how AI is leading the fight against fraud.
“It is the simplicity of the attacks that make it so dangerous and unfortunately businesses are slow to recognise this threat,” he says.
“Even though anti-fraud software costs less than 0.01% of total payments, companies don’t see it as an urgent business need, typically not thinking to protect themselves until they’ve actually experienced an attack.”
Mogul, who has over 20 years of experience in the financial industry, emphasises that services such as Check an Invoice, which utilise AI, are the necessary future for businesses protecting themselves from such scams.
He states that although artificial intelligence has been readily available for a number of years, Check an Invoice is the first tool to fully utilise this technology to directly reduce instances of invoice fraud around the world.
“Using AI to solve common cyber threats that affect all of us and results in billions of pounds of losses is very exciting, and it’s fantastic to see technology not only identifying and preventing fraud but making it affordable, too”.
Whether or not businesses take note of the prominent threat and invest in the vital protection needed, or if they remain negligent and ultimately become the next statistic to invoice fraud, remains to be seen.