Current State of Payment Fraud
– A striking 80% of organizations fell victim to payment fraud in 2023
– This represents a significant 15% increase from 2022
– The trend suggests even more businesses will be targeted in 2025
Common Types of Payment Fraud
Check Fraud
– Nearly half of businesses still rely heavily on checks for B2B payments
– 63% of businesses have experienced check-related fraud
– Common schemes include:
– Forgery
– Counterfeiting
– Physical theft
– Check alteration
ACH (Automated Clearing House) Fraud
– Shows a 7% increase in recent years
– Vulnerability stems from processing delays
– Fraudsters exploit the multi-day settlement period to:
– Complete unauthorized transfers
– Fraudsters disappear with funds before detection
Invoice Fraud
– Average cost to mid-sized businesses: $280,000 per year
– Common tactics include:
– Changing payment details on legitimate invoices
– Making urgent requests for payment information updates
– Submitting slightly inflated invoices to avoid detection
– Using small, repeated fraudulent charges
Impact Beyond Financial Loss
Business Reputation
– Loss of trust from vendors
– Reduced customer confidence
– Damaged business relationships
– Hesitancy from potential business partners
Personal Impact
– Mental health effects on fraud victims
– Stress on business owners and employees
– Time and resources spent addressing fraud
– Potential long-term anxiety about future transactions
Key Takeaways
1. Payment fraud is increasing rapidly and affects businesses of all sizes
2. No payment method is completely safe from fraud
3. Traditional payment methods (like checks) remain particularly vulnerable
4. The impact extends beyond immediate financial losses
5. Businesses need to prioritize payment security measures
To learn more about what to consider to prevent payment fraud see our post; “Payment Fraud Prevention Strategy Outline“
