Wherever money flows on the internet, scammers are not far behind in gaining illicit funds. Invoice fraud is but one of many ways that malicious agents can fool people out of their hard-earned money.
Here, we’ll explore the different ways of invoice fraud, and how to protect yourself.
What Is Invoice Fraud?
Invoice fraud is a blanket term that covers scams that target the invoicing process. Invoice scams work both ways; they can affect you if you’re a business sending a client an invoice, and they can affect you if you are the paying client.
No matter which side you’re on, the result is the same. Scammers manipulate or cheat the system so that they’re the ones getting paid. As such, it’s important to catch invoice fraud before the money is paid into the wrong hands.
The Different Kinds of Invoice Fraud
While invoice fraud can affect both clients and business owners alike, it’s a good idea to learn how scammers affect both sides of the coin for a safer time online.
1. Sending a Fake Invoice
You may be surprised that, sometimes, a scammer will send a completely made-up invoice and get paid for it. But it can happen if the hacker sends the right invoice at the right time.
Sometimes, a company may be so inundated with invoices that the person paying them out doesn’t properly check that the invoices coming in are legitimate. If the communication between the work being done and the invoicing process is weak, there may be no proper way to double-check if the invoicer performed the work they claimed they rendered.
Some especially sneaky scammers use official PayPal invoices to scam you. Such is the case of thePayPal Bitcoin invoice scam, where scammers try to convince you to pay up for an item you never actually bought, and the scammer never intends to deliver.
2. Sending a Duplicate Invoice
Sometimes, the scammer has performed a task for the client, but will still find ways to squeeze out more money for the same job. For example, someone may “accidentally” send over the same invoice a second time, hoping that the client will pay for the same service twice over.
3. Sending an Inflated Invoice
Sometimes the invoice the scammer sends a client is based on an actual service rendered but isn’t completely legitimate. If a business generates an invoice for a client, they may decide to make a few adjustments to the agreed pay so that the client ends up paying more.
This may involve tweaking some of the services rendered so the client is paying slightly more than what they agreed on. The scammer may also charge them for a service they never used, hoping the client won’t notice it among the other charges.
4. Impersonating the Business and Asking for a Bank Detail Change
If a scammer has a foothold in the business' accounts, they may have access to their emails. Or, if they’re especially skilled, they may create a very official-looking email that looks like it’s from the person or company doing the work for the client
From there, the scammer can impersonate the person doing the work and inform the client that they’ve changed banks, and to redirect their payments to the supplied bank details instead. The scammer then sends over their bank details as the replacement.
When it’s time to pay the business, the client ends up wiring the funds to the “updated” bank details. And by the time the client gets an angry email from the business asking where their money is, the scammer has already run away with the money.
5. Redirecting and Rewriting Invoices With the Scammer’s Account Details
If the scammer gets access to the invoice, they can tweak the fields on it themselves so it benefits them. They can either do this by altering the invoice on the business' computer, or by tweaking it when it arrives in the client’s inbox, just so long as they access it before it’s processed.
Usually, this involves changing any payment details on the invoice so that the client pays into the scammer’s bank account instead of the business'. And if done well, neither the business nor the client will know that the bank details were adjusted during the invoicing process.
How to Protect Yourself From Invoice Scams
As you’re able to see, invoice scams can affect both the person sending the invoice and the person paying it. As such, your defense methods depend on which end of the transaction you’re on.
How to Protect Against Invoice Scams as a Business
If you’re the one sending the invoices, be sure to double-check that the invoices you send have the correct details written on them. Ensure someone hasn’t tweaked where the payment should go before sending your invoice off to the customer.
Also, be sure to protect your online accounts with anunforgettable, unbreakable passwordand enabletwo-factor authenticationif available. If a hacker gets into your accounts, they can impersonate you to the person who’s paying you and ask them to redirect the funds.
Finally, you want to avoid making mistakes that may make you look like a scammer to your client. Never send the same invoice twice, and double-check that the services you’ve performed are listed correctly. Failure to do so may cause your client to believe you’re trying to scam them.
How to Protect Against Invoice Scams as a Client
If you’re the one paying people, double-check every invoice you receive. Be sure you’re paying for the services you commissioned, that you’re paying the right price for them, and that you haven’t previously paid for this exact invoice.
If any of the above do occur, it’s important to remember that the people working for you are human beings, and can make errors in their invoices. Regardless, it’s a good idea to pay very close attention to their invoices in the future; regardless of whether the error was deliberate or not, you’re able to avoid paying too much by practicing due diligence.
You also need to protect your business accounts with proper passwords and security measures, to prevent hackers from causing chaos within your systems. If someone else handles your invoices, ensure they’re keeping their account safe and know the basics of howsocial engineeringworks, so they’re not fooled by an official-looking email.
Staying Safe From Invoice Fraud
Regardless of whether you’re a sole trader or a huge business owner, invoice fraud can strike when you least expect it. Practice caution with generating and handling invoices and ensure scammers don’t end up getting someone else’s payday.
