New data recently published by the Association for Financial Professionals in its 2017 AFP Payments Fraud and Control Survey Report reveals a disturbing trend — more companies than ever before fell victim to payments fraud in 2016.
According to the report, 74 percent of finance professionals state that their companies were victims of payments fraud in 2016, which is the highest percentage on record. Here are some other highlights from the report:
- Checks continue to be the payment method most frequently targeted by fraudsters. In 2016, 75 percent of organizations that were victims of payments fraud was through checks — which is a 4 percentage point increase over 2015.
- After checks, wire transfers is the second most-often targeted payment method, accounting for 46 percent of reported fraud attacks.
- Payments fraud through business email compromise (BEC) is a whopping 10 percentage point higher than it was the previous year, with 74 percent of finance professionals reporting that their organizations experienced BEC fraud in 2016.
- The majority of fraud attempts discovered — 63 percent — came from an outside source.
These findings are disturbing for several reasons.
- Data Breaches. In 2013 and 2014, the finance world was rocked by several major data breaches at prominent retailers, with hundreds of millions of plastic credit card numbers stolen. However, as illustrated in the chart above from the 2017 AFP Payments Fraud and Control Survey Report, payments fraud only continues to increase. In fact, and perhaps more disturbingly, payments fraud was at an all-time low during 2013 and 2014 when those major data breaches occurred. And fraud perpetuated through the use of plastic credit cards continues to increase. However, if you’re an organization using plastic credit cards, there is more secure card technology available — through the use of virtual cards.
- Check Payments. Since checks are the payment method most frequently targeted by fraudsters, it’s troubling that checks are still the dominant payment method used in B2B transactions. The 2016 AFP Electronic Payments Survey Report found that 51 percent of B2B payments are made by check. Yet checks easily fall victim to fraud because they lack the security and controls available with electronic payment methods like virtual cards.
- Business Email Compromise. BEC scams are through the roof in 2016 compared to 2015. And according to data gathered by the FBI, since January 2015 there has been a 1,300 percent increase in identified losses from BEC scams, with a combined total loss of over $3 billion. The payment types targeted in BEC scams are primarily wire transfers and checks — fraud that could be prevented with the introduction of more secure payment methods in organizations today, such as virtual cards.
Concerning the report’s findings and the rise of corporate payments fraud, AFP President and Chief Executive Jim Kaitz said in a press release, “With the advancement of technology, organizations are more vulnerable to fraud attacks now than before, and business leaders need to equip their people and systems with the tools and resources needed to prevent fraud and alleviate the impact of an attack.”
At WEX, we couldn’t agree more. If you’re concerned about preventing payments fraud in your organization, be sure to check out our resources on virtual cards, electronic accounts payable, and corporate card solutions to help you implement more secure payment methods in your organization. And if you have any questions, just reach out to us. We’re here to help you prevent payments fraud.
Chart above is from the 2017 AFP Payments Fraud and Control Survey Report, page 2, and is reprinted here with permission.