{"id":6553,"date":"2009-06-12T17:41:00","date_gmt":"2009-06-12T17:41:00","guid":{"rendered":"https:\/\/evssolutions.com\/insights\/b2b-a-growing-target-for-fraud-02-01-2006\/"},"modified":"2023-04-19T20:58:06","modified_gmt":"2023-04-19T20:58:06","slug":"b2b-a-growing-target-for-fraud-02-01-2006","status":"publish","type":"post","link":"https:\/\/evssolutions.com\/insights\/b2b-a-growing-target-for-fraud-02-01-2006\/","title":{"rendered":"B2B: a growing target for fraud-02-01-2006"},"content":{"rendered":"

LOUISVILLE, Ky. (<\/span>February 1, 2006) – Identity thieves have gained deserved notoriety for turning the lives of individual victims upside down. But there’s another target far less apt to get attention from law enforcement officials, lawmakers or the media: victimized businesses. Companies that rely on business-to-business transactions must make countless judgments on whether to extend credit to other businesses. Whether the credit grantor is a financial institution, captive finance company, leasing company or manufacturer, it’s often difficult to tell good credit risks from bad, much less real businesses from fraudulent businesses.<\/p>\n

Nationwide, business fraud tosses are mounting. Typical business fraud tosses dwarf consumer fraud; on average, they are three to 10 times larger. Moreover, “soft” fraud tosses most likely make the toll worse than can be measured. Industry experts say approximately 30 percent of all commercial credit tosses can be attributed to some type of misleading or fraudutent information. Some experts put the number as high as 40 percent. That means a significant chunk of bad debt could be mitigated with a toot to identify false information in the application process.<\/p>\n

However clear the threat, a recent poll of business executives suggests that business has been surprisingly stow, and in many cases unsophisticated, in responding to this trend. Over 70 percent of more than 120 business credit executives potted at a recent conference reported that fraud is a concern to their company, naming four main categories of importance:<\/p>\n

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  1. False or misleading application information<\/li>\n
  2. First-time payment default (for reasons that cannot be identified)<\/li>\n
  3. Fictitious identity of a business<\/li>\n
  4. Identity theft of a business<\/li>\n<\/ol>\n

    But when asked what their companies do to guard against fraud, the answer is: surprisingly tittle. Most companies still rely on a manual review of the toots used for credit underwriting, perhaps looking at a single source such as the credit report. About 40 percent check with public records such as secretary of state files, but those are easily compromised because incorporation papers rarely are independently checked for accuracy and can be easily falsified. Some manual checks may mean simply looking at the applicant’s own website to ensure that it’s consistent, which is not much of a check at all. Remarkably, some 15 percent reported having no fraud processes whatsoever. And while 70 percent said it’s important to automate the fraud detection process, fewer than 5 percent of respondents reported their companies actually have an automated process.<\/p>\n

    Meanwhile, a number of factors appear to be driving thieves away from consumer fraud and toward business fraud. Credit companies handling consumer transactions have deployed sophisticated fraud solutions and fraud toots for years, pushing thieves toward the less secure business-to-business world. White some jurisdictions require police to investigate consumer identity theft, there’s rarely any such requirement for business. Business fraud is sometimes perceived as a victimless crime–and companies may find themselves on their own, without interest or assistance from law enforcement agencies.<\/p>\n

    Some thieves have discovered it is relatively easy to steal a business identity. It’s so easy, in fact, that all some thieves do is take information from yellow pages ads or steal a legitimate company’s information off of the side of its own delivery truck. Posing as legitimate businesses, some fraudulent companies set up incorporation papers, procure a telephone number and establish an address at a storefront postal center.<\/p>\n

    From the point of view of a person reviewing an application for credit, it’s hard to distinguish between a legitimate start-up business emerging in the marketplace and a ruse. From a credit perspective, the legitimate business start-up and the fraudulent operation cut similar profiles. And white many legitimate businesses use multiple addresses; fictitious, “doing business as” names; and multiple guarantors, those practices amount to handy toots for fraudulent operators seeking to conceal their true identities and motives. Lastly, thieves are finding that, all too often, business fraud pays more than consumer fraud–much more. Against this backdrop, companies need an efficient way to authenticate credit applications and fight commercial fraud.<\/p>\n

    The best tools for authenticating B2B credit applications validate and verify information about business applicants and the personal guarantors from a variety of data sources. This multifaceted view helps ensure that the application information is both accurate and truthful Effective authentication took should look at both business and individual application data and validate it for accuracy using criteria such as the following:<\/p>\n