Ryan Mer, CEO at eftsure Africa, a Know Your Payee™ (KYP) platform provider, says the most common thread in cases of payment fraud is the human element which can involve sophisticated fraudsters or unscrupulous employees.
In either case, strengthening processes and protocols can mean the difference between being an easy target and stopping payment fraud in its tracks.
Scenario 1: The external risk of a walk-in criminal
A client wants to sell their car. They present their ID document, ownership papers, and bank details.
What the dealership doesn’t know is that the customer is using a stolen or defrauded ID document and isn’t even the legitimate owner of the vehicle. Because the customer presents what looks like credible documentation, the dealership pays the ‘customer’ either in part or in full for their vehicle without realising they have been dealing with a criminal.
Why it happens: Car papers match the falsified ID document and there is nothing suggesting this is not the legitimate registered owner of vehicle.
In their haste to close the deal and get some desired second hand stock as quickly as possible and avoid inconveniencing the customer, motor dealership employees rush or skip the necessary verification checks which sometimes requires confirmation from various other third parties within the onboarding and payment process.
How it could’ve been prevented: An effective KYP solution would have flagged a mismatch between the client’s stated name and bank account number to prevent the transaction taking place and alerting to the need for caution and additional investigation.
A fully digitised workflow management tool would also ensure a full audit trail for each step in the process to assist employees in following the right procedures for every transaction while increasing efficiencies by automating key verifications in a matter of seconds to guarantee details aren’t compromised prior to releasing payment.
Scenario 2: The internal risk of a corrupt employee
A long-term employee in the accounts department of a respected dealership is defrauding their employer by creating various fake suppliers with their own personal banking details, and that of a friend and relative.
The employee then adds these fictitious payments to a payment batch each month without those responsible for releasing payments even realising.
How it could’ve been prevented:
A trusted eft payment verification platform could have prevented this situation by flagging a mismatch between the ‘supplier’s’ name (in this case the employee’s friend) and their bank account number.
An effective solution would prevent such an incident from occurring in the future as supplier details and bank accounts would be audited, verified and approved at the onboarding point in the process.
People combined with technology and sound business processes are at the frontline of fighting fraud and mitigating risk.
Considering the potentially devastating financial and reputational harm from payment fraud, implementing KYP technology is an urgent need in the digital transformation for all businesses today and motor dealerships are definitely not exempt from this.