Transcript
Hello everyone, and welcome to today’s webinar, “How to Reduce the Risk of Payment Fraud Through Automatic Verification of Bank Account Ownership.” Today’s webinar is sponsored by Financial Operations Network. My name is Mark Brousseau, President of Brousseau and Associates, and I am pleased to be one of your presenters for today’s webinar. I am joined today by Phil Binkow, Chief Executive Officer of Financial Operations Networks. Hey Phil, how are you today?
Hey Mark, I’m doing great. Thanks for having me here on the webinar.
The pleasure is ours.
The risk of payment fraud is the top concern of accounts payable departments. Twenty-five percent of AP leaders say that they are concerned about the way their departments are doing things these days, and that’s no surprise. The FBI, the State’s Attorney General, Interpol—a who’s who of people you never want knocking at your front door—are sounding the alarm. They are saying that the way that AP departments operate is creating more vulnerability for fraud. During today’s webinar, we are going to show you one way that organizations are unwittingly leaving themselves vulnerable and the steps they can take to mitigate the risk of fraud.
But before we do all that, we wanted to start with a poll question, which is about to be displayed on your screen. We want to know, over the past two years, how has your process of validating supplier account details and other information changed? Over the past two years, how has your process of validating supplier account details and other information changed? Is it significantly more complex? Is it slightly more complex? Has there been no change in your process for validating supplier account details and other information? Is it slightly less complex or would you say your process of validating supplier account details and other information is significantly less complex? You are living the dream. Take a moment to respond to the poll question now displayed on our screen and we’ll discuss the results in just a moment.
These poll results aside, Phil, the fact is when it comes to validating supplier account details, most AP departments certainly aren’t living the dream. It’s a really burdensome process, isn’t it, Phil?
Uh, Mark, it truly is. You’re right on point. As you and I have discussed in the past, AP is the last control point before cash goes out the door. So there’s a vested interest in accuracy and security and making sure that the payments are made correctly. And AP and procure-to-pay professionals are so much more aware of the risk of business email compromise than they were even just a couple of years ago.
Very smart and highly sophisticated bad actors are attacking the email systems of their vendors, learning where the money flows, and then hijacking current email threads to request changes to fraudulent bank accounts. As a result, bank account ownership verification has grown into a cumbersome mix of time-consuming internet searches, phone calls, and other tasks that are almost too numerous to mention.
Phil, how has the shift to remote working or hybrid work environments impacted the supplier onboarding and registration process?
It’s really had a significant impact because companies have had to implement many additional security procedures to support the remote working environment. People don’t always have an opportunity to go down the hall or even right next door and talk to somebody about a particular issue. Additionally, folks are so dependent on email, and we know it’s not a secure medium for transferring information. It’s just become more prevalent.
Alright, Phil, let’s see how our attendees responded to our poll question. We asked them. Over the past two years, how has your process of validating supplier account details and other information changed?
Well, Phil, it looks like you and your team over at Financial Operations Network have a lot of work to do. Look at this. Seventy-four percent of our attendees believe the process of validating supplier account details and other information is more complex compared to just two years ago. Nearly one-third of our attendees say the process is significantly more complex. Forty-two percent of our attendees say it’s slightly more complex. Only ten percent of our attendees would argue that their process is less complex than it was two years ago. And I would wager that these are the folks that have probably automated things. Phil, nearly three-quarters of our attendees are saying that this process of validating supplier account details and other information is more complex. Surely that surprises you?
No, you know, that’s a good question, but it’s something that we are seeing every day. When we talk to folks about all of the onboarding tools that we have, automated bank account ownership verification really has been and remains at the top of everybody’s priority list right now. And the fact of the matter is, it’s not just the complexity of validating supplier information that has businesses in a pickle, it’s also the risk associated with it.
The fact is, businesses are under siege these days from those sophisticated bad actors that Phil was speaking of. Seventy-four percent of organizations say they were the targets of payment fraud attacks in 2020. That’s according to a survey by the Association for Financial Professionals. Two-thirds of organizations believe that the pandemic has contributed to their risk of fraud. And this, of course, goes back to that shift to remote working and hybrid work environments.
The fact is, few of our processes for validating supplier information were built for a remote work environment. And when we speak to AP leaders, well, this is not going lost on them. AP leaders believe that the risk of fraud and compliance issues is their biggest concern as their departments work in a remote work environment these days, and many of them believe that their risk of fraud is higher compared to the start of the pandemic.
Just several years ago, we know that when businesses rushed to remote work environments, we had to quickly adapt paper-based processes to this new way of working, and few of our systems and processes were set up for that. The challenge is, now that we’ve settled into this remote work environment, we haven’t made enough changes to try and mitigate our risks of fraud. And fraudsters never let a good crisis go to waste. They’ve swooped in using new sophisticated tools, and they’re robbing many businesses blind.
Today, forty percent of accounts payable departments say they’ve experienced multiple cases of attempted payment fraud in just the past year. And what’s really surprising about this data is that when you drill down into it, a significant number of AP departments say that their department has been the victim of attempted or successful fraud seven times or more within the past year. And as staggering as those numbers are, when I was at the IOFM AP and P2P conference recently, several AP leaders pulled me aside and said, Mark, these stats are, we don’t argue with them. The fact is, though, that in our department, a week doesn’t go by where we don’t get a suspicious email or some sort of obvious phishing scheme.
Phil, this is the type of environment that AP leaders are facing these days. It’s gotta be overwhelming for AP leaders who are already overworked trying to deal with the pressures of an uncertain economy. Talk to me about that.
Well, you’re right. It’s really amazing what’s happening. Everybody in AP is playing a game against another team of these perpetrators who are so much more sophisticated, smarter, and well-financed than ever before. These are real businesses, and they continue to hammer away, sending out millions and millions of emails and probes in order to try to get into somebody’s system, usually the vendor system. And it’s almost overwhelming unless you have the right controls in place to protect against it. For them, it’s very cost-effective to make all of these millions of attempts because it only takes a few to actually pay off for them. And we don’t really see from the research that we’ve done that this is going to let up anytime in the near future.
And that’s an important point. If your knees are already buckling, you’ve gotta find a solution to this. And as Phil said, email is a big contributor to this payment fraud. In many ways, it’s the way that we’re leaving our barn door open to all the foxes. We’re finding that compared to automated systems, email simply is not secure. In many cases, we have unsecure email routing. There’s no segregation of duties, no chain of custody assurance, no tracking of actions taken on a document, no ready access to audit information, no logging of actions taken on a document, and there’s no stopping someone from deleting a document or key piece of information prematurely ahead of our business’s retention schedules.
Now I know what you’re thinking. What else were we supposed to do back in 2020, Mark? Well, the fact is that email was a great workaround when we had to suddenly go to a remote work environment. But I would argue that email is a workaround that no longer works. Proof positive of that is the ways that fraudsters are using email to infiltrate our systems and rob us blind. And there are three key ways that they’re using email as a lever to perpetrate fraud against our organization.
The biggest one, of course, is business email compromise.
This is where scammers either gain access to your vendor’s email and send spoof emails or they create web domains that mimic a business you are doing business with, where one letter is different, and unless you’re carefully paying attention, it’s too easy to miss this in our busy long days. In other cases, scammers will go ahead and impersonate someone within our own organization. We’ve all received these emails from a CEO who says, “We need to quickly wire money to this brand new supplier. The business is counting on you,” and then our erstwhile AP folks want to do right by the business, comply, and end up falling victim to fraud.
But there’s a more subtle way that email leaves us vulnerable to fraud, and that’s when our employees have to handle all of these manual processes and they make honest mistakes. They transpose numbers, they leave out information, and those mistakes create vulnerabilities for our organizations. In fact, Phil, tell me if I’m wrong here, we are seeing more and more cases where it’s not just the fraudsters who are creating vulnerabilities, but it’s honest mistakes by our AP folks who are busy, who are overworked, and who are just trying to get things done in a timely manner. Is that right, Phil?
It absolutely is, Mark. And the challenge here is it’s really difficult to keep up with the vast number of payment methods and different ways that suppliers are being paid. So it’s really almost a perfect storm. And not only does it create issues in terms of fraud, but it also has a real impact on the AP team’s workload, creating more and more complexity for them to manage, which is why the automated bank account ownership verification has really become such a critical tool to help them manage these types of risks.
And that brings us to the heart of today’s discussion, and what I believe is really the key to turning the tide in the war against payment fraud, and that is automating the verification of bank account ownership. By doing so, we take out all of those manual touchpoints that create vulnerabilities. We eliminate the need for our AP folks to be doing Google searches, to be making phone calls, to be trying to get the right person on the phone at our suppliers’ organizations. And instead, we can use tools to automatically verify bank account ownership at the time of payment setup. And in some cases, ongoing, if our solution allows us to do so, we can regularly ping and verify that this information hasn’t changed and that our money is going to the right place.
So Phil, tell us a little bit more about the automated bank account ownership verification tools that Financial Operations Network (VendorInfo) is offering and how it can help our audience.
Sure, Mark. Financial Operations Network has developed a solution that allows for real-time verification of bank account ownership. What this means is that at the point of setting up a new supplier or making a change to an existing supplier’s bank account information, our tool can instantly verify that the account belongs to the supplier you’re intending to pay. This eliminates the guesswork and reduces the risk of fraudulent payments significantly. Our tool integrates seamlessly with your existing ERP or AP systems, making the transition smooth and easy. It also allows for ongoing monitoring, so if there’s any change in the bank account ownership, you are alerted immediately.
Our tool uses a combination of data sources, including direct connections to banks, to ensure the highest level of accuracy. This not only helps in preventing fraud but also streamlines the entire AP process, making it more efficient. Our clients have seen a significant reduction in fraud attempts and an increase in the overall efficiency of their AP departments.
Phil, this sounds like a game-changer for AP departments. What are some of the key benefits that organizations can expect when they implement this automated bank account ownership verification tool?
The key benefits include a significant reduction in the risk of payment fraud, as we’ve discussed. There’s also a considerable time savings for your AP team, as they no longer need to spend hours manually verifying bank account information. This frees them up to focus on more strategic tasks. Additionally, our tool provides a full audit trail, which is essential for compliance and reporting purposes. And finally, the integration with your existing systems means there’s minimal disruption to your current processes.
That sounds fantastic, Phil. And I understand that Financial Operations Network is offering a special promotion for our webinar attendees today. Can you tell us a little bit more about that?
Yes, that’s right, Mark. For all webinar attendees, we are offering a free consultation and demo of our automated bank account ownership verification tool. This is a great opportunity for you to see the tool in action and understand how it can benefit your organization. Additionally, we are offering a special discount on the implementation fee for those who sign up within the next 30 days. So don’t miss out on this opportunity to enhance your AP processes and reduce your risk of payment fraud.
That’s a generous offer, Phil. Thank you. And thank you to Financial Operations Network for sponsoring today’s webinar. Before we open the floor to questions, Phil, do you have any final thoughts for our audience today?
Yes, Mark. I just want to emphasize the importance of taking proactive steps to protect your organization from payment fraud. The threats are real, and they are not going away anytime soon. By implementing automated bank account ownership verification, you can significantly reduce your risk and improve the efficiency of your AP department. Don’t wait until it’s too late. Take action now and protect your organization.