Business payment frauds

The ongoing digital transformation and the pandemic-induced rapid digital migration have opened many avenues for fraudsters and hackers. The virtualization of education, teaching, businesses, workspaces, etc., demanded better digital infrastructures. It increased digital literacy and boosted the economy for sure, but also brought some flaws with it. The most important issue was the escalated amount of cybercrimes, frauds, and data breaches.

Business payment frauds constitute a large portion of the cybercrime domain. Many industries have been affected by payment frauds and even higher education institutions are not spared. You heard right. Universities are among the highly targeted victims of business payment frauds. According to a report from 2019, the University of California San Diego and the Pennsylvania University were victims of a fraud scheme worth USD 870,000. Apparently, these universities were looted through a business email compromise and spear-phishing attacks.

How Can Universities Fall For It? 

A business email compromise is a fraud scheme wherein the hacker targets the details of the vendors linked to an institution and compromises the emails of both the university and the vendors. 

Since educational institutions work with many vendors and payees, it becomes naturally difficult and challenging to manage these payees’ identities and authenticate them. 

Employees working in the accounts payable section often deal with thousands of vendors and authorizing such a huge load can give rise to errors. Also, these professionals may not be able to understand if they are approaching the right vendor. If the verification process is carried out in a manual or paper and pen manner, then it is sure to create errors and make the information vulnerable. Vulnerability can also be accounted towards the decentralized procurement structure in these higher ed institutions.

Ensuring Safety Against the Frauds

Digitization and automation could help fight these fraudulent payments to an extent. If there is a system that can continuously monitor the data flow and information in real-time, it reduces the burden on the accounts payable and procurement teams in universities. 

Manual verification creates accuracy challenges and thus institutions should adopt automated and digitized verification methods. For example, Payment Works, a security platform promises to secure the customers against business payment frauds. They automate the payee management process and their business identity platform offers a networking platform for the payers and the payees with verified information. 

Independent verification approvals will ensure that the banking information of vendors is not modified or changed without approval. The reports regarding vendor information should be reviewed and updated consistently. Identifying old purchases and clearing those details will also help. 

Streamlining the vendor on boarding process to secure them is necessary and can be easily achieved with digital tools. Backing up and revisiting the documentation process will ensure that the vendors are not approved out of requirements. 

Examining and monitoring the payee verification process should become the top priority when it comes to business payments, especially digital in educational institutions.