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Credit Departments Report Increase in Fraudulent Account Setup Attempts

Updated: Oct 2

Fraudulent activity of all kinds in B2B trade has been on the rise over the last several years as bad actors take advantage of the newly virtual business environment. In particular, nearly half (49%) of credit professionals have seen an increase in fraud attempts during the new customer setup process, according to a recent eNews poll.


“Traditionally fraud came from existing accounts, but as we’ve gotten better at catching those, the newest wave seems to be fraudulent applications,” said one NACM member. “On the application, these fraudsters are providing just enough accurate information to make it look realistic, while slightly changing letters or acronyms.”


A few of these fake accounts made it through the entire process at one credit professional’s department, and her team has since been on high alert. “We are operating on heightened security. Our team has been checking independent sources to verify information of the company applying for credit and contacting the company directly. We check to see if the person applying is truly their employee.”


Other than independently verifying information, the credit professional recommends involving the local sales or credit department that work in the area where the application is from. “You cannot rely on just people’s titles and names anymore because that information can easily be taken.”


Networking is another tried and true strategy for catching fraud. By participating in NACM industry groups and meeting with other credit professionals, one member was able to “compare notes and realize a pattern of one person attempting to set up an account and purchase copper wire from multiple businesses,” she explained.


If you are unsure about a credit application, it is always best to order a credit report from a trusted organization. NACM’s National Trade Credit Report (NTCR) is your one stop shop for reliable credit information. “As a credit detective, my ability to put the clues together for a good credit decision just got a whole lot easier,” wrote Norman Zusevics, CICP, credit manager at Shure (Niles, IL).


NACM is highly selective about what information is accepted for the NTCR so no fake data slips through the cracks, said Anton Goddard, president of NACM South Atlantic (Orlando, FL). “In the past three years, we’ve seen more attempts from fraudsters to try and submit fake data than ever before. The trend we’ve seen recently is companies that open internet stores try to entice people to open an account with 30-day terms and then try to report that information to NACM, but we are not accepting trade data from these people for credit building purposes.”


Digital fraud skyrocketed 60.5% in the financial services industry between 2019 and 2021, largely due to the shift toward digitization, according to the 2022 Global Digital Fraud Trends from TransUnion. “We have seen a massive jump in fraud attempts during the new customer setup process as we started offering an online credit application,” an NACM member said. “Traditionally, someone would come into a branch, call or email and ask for an application. But now [new customers] can just go online and that is where they have been able to easily put in fraudulent information.”


As new types of fraud emerge, “you will need to change your processes accordingly as you learn new ways these people are going to commit fraud and remain flexible to catch every new attempt,” she added.


This article first appeared in the Sept. 15 eNews. It is used with permission.

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