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also suggest that companies
aren’t doing enough on the front
lines to fight fraud.
“Work with the clerks and man-
agers that are likely to be the first
people to be contacted or be-
come aware of a fraud attempt,”
one survey respondent advises.
“They can stop attempts before
they get to the payment phase.”
Another finance executive sug-
gests it is simply time to buckle
down to the task at hand and
do a better job of it. “Set aside
sufficient budget, do the proper
research, then employ the right
specialists to get this in place,”
the respondent admonishes.
“Invest in strong technology and
air-tight workflow,” writes an-
other. “Allocate the people and
resources to combat and reduce
fraud—(the) benefits fall to the
bottom line,” writes still another.
REPORT FROM THE FRONT:
FRAUD IS ON THE RISE
Payments fraud is on the rise.
Four in ten (40 percent) of
survey respondents say orga-
nizations in their industries are
experiencing a much higher
incidence of payments fraud
than they did just two years
ago. Another 15 percent say
they can’t confirm or rebut the
idea, leaving open the possibil-
ity that increases in payments
fraud are broader still.
These findings are directionally
consistent with other studies, in-
cluding the 2017 AFP Payments
Fraud and Control Survey con-
ducted by the Association for
Financial Professionals. It found
that 74 percent of organizations
had experienced attempted or
actual payments fraud in 2016,
up from 62 percent in 2014 and
the highest level recorded since
the AFP began tracking the
problem in 2006.
Contrary to what one might
expect, it isn’t always smaller, less
sophisticated enterprises that
are being impacted by payments
fraud. In 2016, the AFP survey
found, organizations with at least
$1 billion in annual revenue were
actually more likely than their
smaller counterparts to have been
hit by the crime. And while the
majority of the respondents to
that survey reported that their
company’s direct payments-fraud
losses were relatively small—less
than $100,000—32 percent of
financial professionals at com-
panies with at least $1 billion in
revenue and more than 100 pay-
ment accounts reported losses
exceeding $500,000. Within that
group, 16 percent said their losses
exceeded $2 million.
The reason behind the growing
incidence of payments fraud isn’t
hard to fathom. Throughout his-
tory, criminals have demonstrated
a remarkable dedication to trying
to outsmart their victims, and
the advent of new technologies
such as social media and mobile
shopping and mobile banking
have simply widened the field of
opportunity. While check fraud
remains the most common type
of payments fraud, for example,
criminals today are increasingly
exploiting the digital technolo-
gies that make it faster and easier
for companies and consumers
to interact with each other. Last
June, the Federal Bureau of Inves-
tigation felt compelled to issue
an alert warning about the grow-
ing problem of “business email
compromise,” in which fraudsters
target businesses working with
foreign suppliers, or businesses
that regularly make wire transfer
payments.
The relentless enthusiasm exhib-
ited by criminals searching for
new ways to defraud business-
es means that businesses must
combat their efforts with equally
relentless countermeasures.
ELEVATING PAYMENTS FRAUD
DETECTION TO A FIRST-ORDER
PRIORITY
Only 10 percent of the execu-
tives in the CFO Research survey
feel strongly that most finance
teams in their industry have
strong processes and technol-
ogies in place to capably and
efficiently detect fraud or ensure
fraud-related compliance. It is
a weak endorsement of current
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FIVE KEY CFO CHALLENGES FOR ADDRESSING PAYMENTS FRAUD