6 Red Flags of Fraudulent AP Payment Requests Companies Should Know

Let’s face it, the world is full of immoral people. Since that’s not exactly a news flash, it should come as no surprise to anybody that there are people out there who try to bilk companies into sending them money, even though the person making the request has provided no good or service to them. It’s fraud, pure and simple.

The white-collar criminal’s premise is that accounts payable (AP) departments are like banks – they have lots of money – and because companies receive so many AP invoices in a month, they might just blindly pay one without first vetting out its legitimacy. This type of billing scheme is one of the methods criminals use to scam AP departments out of money and, unfortunately, many AP processors fall prey to these practices, causing millions of dollars in fraudulent payments each year. 

As an AP professional, what should you be on the lookout for? Below are some red flags of a suspicious request for payment:

• The request is classified as “urgent”
• It requires free-form (one-off) wire transfer rather than a template (recurring vendor)
• The payment would be going to a different country than where previous payments have been sent
• An email/fax request contains typos and/or poor grammar
• The request comes from a different e-mail address than the usual vendor company contact
• The request is emailed from a personal (i.e., Gmail, Hotmail, Yahoo) rather than a company account

As a survey in our recent webinar, “How to Use AP Automation for Fraud Prevention and Risk Management,” underlined, the most common of these fraudulent payment schemes are requests of payment labeled “urgent.” Two-thirds of respondents to our poll question asking which of these red flags are most prevalent in their organization answered that urgent payment requests were what they received most frequently.

Our expert, Joe Zulich, Manager of Accounting Operations at White-Rodgers (a division of Emerson), advised: “The No. 1 thing is to know your vendor. You need to call that vendor, and not necessarily the person who is on the email; you may need to call somebody else in their finance department, and you should be verifying the bank information. You may say, ‘Oh, that’s a lot of work’ – well, the first time you send something out the door that is fraudulent, then you’ll say, ‘Why didn’t I do that?’”

For more insight like this from Joe and DataServ Founder/CEO Jeff Haller, you can watch our complete 60-minute webinar on demand by playing the video below. 

If you would like more information on how an AP automation solution can streamline your AP department and reduce the risk of falling prey to fraudulent payment requests, contact us at info@DataServ.com. We also encourage you to download our brand new eBook, It's Time You Automated Accounts Payable - Here's How, for free here.