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Invoicing Scams: How to Prevent Them

By Bidvest Bank
These days, bank scams are far more varied and sophisticated than ever before. One example is the recent rise of a specific type of bank fraud known as invoicing scamming, which you should take note of if you’re a business. 

As the name suggests, this type of banking fraud happens when a scammer changes the bank details on an invoice that’s been sent from a supplier to a customer. The supplier and customer can be in any industry: the supplier could be a manufacturer of plastic toys in China, or the customer could be a travel agency booking a trip on behalf of their clients in a hotel in Europe. 
Here’s a breakdown of how the bank scam works:

1. The customer places an order with a supplier. 
2. The supplier issues an invoice to the customer by email before, during or after the transaction.
3. The fraudster hacks into the supplier’s email account and intercepts the invoice. 
4. The fraudster replicates the invoice and changes the bank details to their own, before reissuing it to the supplier under the guise that their bank details have changed. 
5. The customer pays the invoice into the new (fraudulent) bank account.
6. The supplier doesn’t receive payment and contacts the customer to query it, at which point the supplier becomes aware of the scam.  

Unfortunately, in this situation the bank is not responsible for recovering this money, and so as the customer, you’re still liable to pay the supplier for the outstanding invoice amount – even though you’ve already paid the money somewhere else. Worst of all, it’s very difficult if not impossible to recover the money back once it has landed in the wrong bank account. 

So, how can you prevent invoicing scams from happening? 

If you’re a customer:

  • If you receive an invoice from a supplier where invoicing details are different from previous invoices, always confirm these changes by another method besides email, such as by phone, fax or in person.
  • If you’re a customer, be suspicious if the bank details you’re given from a supplier are in a different country (e.g. the UK) from where you’re buying the goods (e.g. China).
  • If you have any other reason to be suspicious about the invoice you receive via email, phone your supplier and talk to them about your concerns.

If you’re a supplier:

  • Tell your customers to alert you if the bank details on the invoices you send are different from before.
  • If you do change your bank details, phone your customers to confirm these changes in person. 
  • Keep in regular contact with your customers about when you expect them to make payment so that you know when to expect the money.

Whether you’re a supplier or a customer, always be vigilant about making or receiving payment. Doing this extra due diligence and asking questions where necessary can go a long way to preventing this situation from happening in the first place. 

No matter what industry you’re in, we can help with all aspects of your business banking. The Bidvest Bank One-to-One account streamlines your business banking by giving you one point of contact for all your needs. Find out more about it.