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Report: Many companies clueless about payment fraud
Written on Aug 30, 2024
Business payment fraud clearly has become a big headache for companies. But it’s not easy to get a handle on just how big the problem is, with about half of companies saying they don’t have a clue about the extent of their exposure, according to a new study.
In the June survey of 516 finance professionals, conducted by payment security solutions vendor Trustmi, more than one in five respondents (22%) said their organization has already been targeted by AI-driven deepfake or executive impersonation attacks.
However, 48% of the participants — which included CFOs, treasurers, and accounts payable professionals — said they didn’t know how many times they’ve been targeted with payment fraud attempts of any type over the prior 12 months. And 51% said they didn’t know how much money such fraud cost them during that time.
This lack of insight calls for a shift from siloed operations and outdated legacy systems, Trustmi said in its survey report. In an apparent allusion to its own technology it added, “Given the volume of business payments and the diversity and complexity of partner ecosystems, leading-edge finance teams are leveraging AI-powered payment technology that delivers real-time visibility from vendor onboarding to payment release.”
It is especially troubling, according to Trustmi, that respondents couldn’t quantify their losses from payment fraud, since “financial planning and management are core elements of each financial professional’s day-to-day job.”
About a quarter of those surveyed (23%) couldn’t even say how many technology solutions — ERP and vendor management systems AP automation technologies, and AP fraud detection tools — are involved in their payment processes.
Approximately a third (32%) of respondents said they’re using three to five such solutions, while 11% are using 10 or more solutions. Surprisingly, 14% said they do not currently use any payment technologies. That leaves them vulnerable to a heightened risk of financial losses, compliance issues, and reputational damage, Trustmi said.
Almost seven in ten respondents (69%) have automated some or most of their payment processes, the research found. However, only 5% of their organizations have completely automated such processes, and 26% still operate manual or somewhat manual payment processes.
As to the causes of payment fraud, the single largest culprit was human error, experienced by 50% of the survey base. That “often stems from a company’s reliance on legacy technologies that struggle to keep up with the increasing number of payment cycles and transaction volumes,” Trustmi wrote.
Next at 42% came business email compromise, where perpetrators gain access to executives’ or decision-makers’ emails to steal sensitive information and send fraudulent payment requests, among other actions.