Your business client receives an unexpected invoice via email, seemingly from a company with which they do business. They’re puzzled, thinking their accounts were settled.
The dilemma? Whether to pay the invoice and clear their plate or question it further.
It’s a scenario that happens far too often, and it’s a prime example of why educating your clients about the dangers of mishandling unusual invoices is crucial.
Invoice fraud is rising, costing U.S. companies an average of $300,000 in annual losses. Learn how you can protect your clients with Invoice Manipulation coverage.
What Is Invoice Manipulation?
Invoice manipulation is a sophisticated social engineering scam that diverts a company’s funds to a phony account.
Unlike invoice fraud, which involves sending entirely fabricated invoices for payment in hopes of slipping through an organization’s financial controls, invoice manipulation exploits trust. It corrupts real invoices by altering critical details like payment information, making the deceit harder to detect.
How Fraudsters Trick Businesses Into Paying Fake Invoices
To better help your client identify fraudulent invoices, you’ll need to know the various types and how they work:
Fake Vendors
This type of invoice fraud involves creating vendors that seem legitimate at a surface level but are, in fact, fronts for fraudsters. Businesses might be tricked into adding these fake vendors to their payment systems, leading to payments for nonexistent services or products. The sophistication of these schemes often involves forged documents and websites to mimic real businesses, making them particularly challenging to detect without thorough vetting processes.
Invoice Deceptions
Invoice deceptions are direct manipulations of genuine invoices. Cyber criminals intercept invoices and alter critical details such as bank account numbers, amounts, or payment terms. The recipient, believing the invoice is from a trusted vendor, pays the modified invoice and inadvertently sends funds to the fraudster. This method leverages the trust between businesses and their vendors, exploiting it for financial gain.
Traditional Check Frauds
Most businesses process payments digitally, but some invoice manipulations rely on old-fashioned methods, like altering physical checks. This tactic can involve intercepting mailed checks, changing payable details or amounts, and depositing them into fraudulent accounts.
The persistent issue of check fraud underscores the importance of vigilance across all payment methods.
How to Prevent Invoice Manipulation
To combat invoice manipulation fraud, your clients need a strategy that covers all bases. Implementing stringent prevention strategies will reduce the chances of taking a financial hit and keep their transactions honest.
Train Employees
Regular training sessions on recognizing signs of invoice manipulation can be a critical defense line. Educating employees about the nuances of fraudulent invoices and the importance of vigilance ensures they are well-equipped to spot and report suspicious activities.
Implement Regular Security Audits and Update Cyber Security Protocols
Conducting regular security audits helps identify vulnerabilities in their financial processes while updating cyber security protocols in response to evolving threats can protect systems from breaches. This proactive approach is vital in creating a comprehensive defense against attempts at invoice manipulation, ensuring their business’s digital infrastructure can thwart evolving tactics.
Have at Least Two People Review All Invoices Received
Instituting a dual-control system for invoice verification adds an extra layer of security. Requiring at least two employees to review and approve invoices before payment will significantly reduce the risk of oversight and ensure a thorough check against any discrepancies or signs of manipulation.
Call Vendors Before Paying Invoices
Direct communication with vendors before processing payments can prevent fraud. This simple yet effective step lets businesses confirm invoice details directly with their suppliers, ensuring the payment request is legitimate and matches the vendor’s records.
Incorporate Invoice Manipulation Coverage
Despite all precautions, the risk of falling victim to invoice manipulation remains. This is where Invoice Manipulation Cyber coverage becomes indispensable. This insurance policy offers a safety net, providing financial protection against losses incurred through such fraudulent activities. Not only does it cover the direct financial implications, but it also supports recovery efforts, ensuring businesses can bounce back with minimal disruption.
Offer Your Clients Invoice Manipulation Coverage
Without Cyber Liability Insurance, many businesses simply cannot withstand a social engineering attack. ProWriters brokers easily find competitive quotes from top Cyber insurers for their clients through our Cyber IQ Comparative Rate Platform. The platform’s side-by-side comparisons highlight policies with essential Invoice Fraud and Manipulation coverage, ensuring businesses and third parties are protected from financial losses.
For insights on conveying social engineering risks to clients and securing the right policies for them, download our free eBook, “How to Sell Cyber: Big Claims in Ransomware & Social Engineering.”
