Introduction
Enterprise Fraud Management (EFM) has undergone major changes with fraud management now a top priority for businesses. In today's digitally driven marketplace, companies must contend with technological advancements as well as the growing complexity and sophistication of fraudulent payments.
This trend shows no sign of slowing. With the economy struggling due to the COVID-19 fallout and the cost of living crisis, research by UK Finance discovered that £1.2bn was lost to fraud in 2022. With the global economy facing uncertainty and technology readily available, unscrupulous individuals only need a computer and an internet connection to put a legitimate business at risk.
This comprehensive guide will explore:
- What is Enterprise Fraud Management?
- The importance of fraud management
- The cost of APP fraud to businesses
- How to safeguard your business and prevent APP Fraud
What is Enterprise Fraud Management?
Enterprise Fraud Management is a critical component of cybersecurity that seeks to detect and prevent fraudulent activities within a business by uniting the business's fraud processes and solutions in a central workspace. The latest wave of sophisticated fraud tactics necessitates a comprehensive approach that integrates multiple tools and technologies to provide a holistic view. This not only detects and mitigates fraud, but also fosters improved customer centricity and enhances operational efficiencies across the wider business – a true win-win scenario.
Enterprise Fraud Management solutions differ from standard solutions. They are designed with scalability, complexity and integration capabilities in mind, allowing them to cater to niche and extensive requirements. This enables organisations to seamlessly detect and mitigate fraud across a range of internal and external channels, accounts and transaction types, protecting the business from financial, operational and reputational risk.
Importance of fraud management
The importance of fraud management cannot be understated. A report by BDO UK analysed the 10-year data trend and discovered that not only is the number of reported fraud cases increasing, but the amount that’s being stolen is also increasing – warning that the trend is likely to accelerate as fraudsters look to exploit the latest technologies and Artificial Intelligence (AI), putting all businesses at risk.
The total value of fraud in the UK reached £2.3bn in 2023, double the £1.1bn recorded in 2022 - although the true level of fraud is likely to be significantly higher as many organisations choose not to report the attacks they suffer.
Fraudsters are deploying increasingly sophisticated tactics to steal money, often targeting specific businesses or individuals across multiple channels. The key factors behind the rise include a large increase in online scams, phishing attacks and a significant spike in Authorised Push Payment (APP) fraud – which accounted for 40% of total fraud losses in 2022.
The error support feature has proven extremely useful. Highlighting discrepancies such as spelling mistakes and mismatched details allows us to swiftly identify and correct errors, reducing onboarding time and improving our payment accuracy and efficiency
Luke Dodd
Head of Finance
The cost of APP fraud
The impact of APP fraud goes beyond the immediate financial loss, with businesses responsible for the consequential costs of any recoveries. In 2022 alone, APP fraud accounted for 40% of fraud losses. The disruption caused by these scams can lead to severe cash flow issues, and in an already challenging economic environment, this can quickly affect their ability to operate smoothly and may push many to the brink of insolvency.
Strikingly, research by UK Finance shows that the average initial loss for frauds under £25k was £24,574, for those £25k to £100k it was £37,741 and for £100k to £1 million it was £166,752.
These hidden costs not only show the true cost of dealing with fraud but also demonstrate the importance of having a robust fraud prevention strategy in the first place.
Bank Account Verification: a new normal in business payments
Bank Account Verification powered by Confirmation of Payee is a solution designed to help businesses prevent fraudulent payments from being made by providing simple warnings regarding fraudulent activity if the bank account details do not match the intended recipients during registration.
Creditsafe is the leading provider of Bank Account Verification solutions with 97 – 99% coverage of UK business and consumer bank accounts, made easily accessible through multiple methods including API, batch processing, and web service access.
Businesses can automate time-consuming validation methods and instantly validate account details in bulk at registration in real-time to improve payment accuracy and operational efficiency. By removing payment delays and improving payment security, Creditsafe adds an enhanced layer of security to your business's operations and helps drive improved operational performance.
With Creditsafe's Bank Verification solution, businesses can:
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Prevent fraudulent and payment errors
Always be sure you know who you’re paying by verifying account details in real-time to ensure that payments are being sent to legitimate accounts.
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Enhance customer trust
Improve customer trust and confidence by adding a layer of security to your payment process to deliver an efficient and secure end-to-end payment process.
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Improve operational efficiency
Ensure account accuracy when onboarding new suppliers and streamline the payment processes with bulk and individual checks, reducing the time and resources spent on resolving payment issues and fraud incidents.