While corporates are adopting stronger internal controls to combat the threat of payments fraud, new data from the Association for Financial Professionals (AFP) reveals the number of incidents has continued to climb to new heights.
In a press release Tuesday (April 9), the AFP announced that its 2019 AFP Payments Fraud and Control Survey, underwritten by JPMorgan, found record highs for the percentage of companies hit by payments fraud. A record-setting 87 percent of large companies with revenues more than $1 billion were hit by payments fraud in the past year, a 7 percent increase from the year prior.
Firms with revenue below $1 billion actually saw a decrease in fraud attempts in 2018, from 73 percent in 2017 to 69 percent last year.
However, instances of the business email compromise scam continued to climb, with 80 percent of companies surveyed reporting they were targeted by a BEC scam, up from 77 percent in 2017. Most of the companies targeted (54 percent) experienced a financial result of that scam, marking the first time the AFP has found that a majority of businesses suffered losses due to this type of attack.
As a result of the continued threat of payments scams, more than three-quarters of businesses surveyed said they have implemented stronger internal controls.
There was a decline in instances of check fraud businesses reported experiencing between 2017 and 2018, but 70 percent of organizations still report having been exposed to check fraud last year.
Meanwhile, the instances of ACH-related fraud are on the rise: ACH debit fraud was up from 28 percent to 33 percent, while ACH credit fraud climbed from 13 percent to 20 percent year over year.
Overall, 43 percent of businesses said they have suffered a financial loss as a result of some type of payments fraud.
“Payments fraud is a persistent problem that is only getting worse despite repeated warnings and educational outreach,” said Jim Kaitz, AFP president and CEO, in a statement. “Treasury and finance professionals need to learn the latest scams and educate themselves — and perhaps more importantly — their work colleagues on how to prevent them.”
“It is equally important for businesses to mitigate against non-financial implications of payments fraud,” added JPMorgan Managing Director Jessica Lupovici in another statement. “Businesses stand to suffer reputational risk which can be severe, expensive and require significant cleanup efforts.”