Digital transactions: orders placed using fake identities

A true story: a Swiss food processor was contacted by a well-known department store in the UK – the sender would be interested in receiving a large food delivery, he said. Once they had agreed the arrangements, including payment by invoice, the goods were shipped to the department store. However, even after the invoice fell due, no payment was received. Finally, after contacting the department store several times and making painstaking enquiries, it transpired that the supposed buyer never worked at the department store and his e-mail address was fake. The food company suffered a loss amounting to tens of thousands of Swiss francs.

Taking preventive measures to minimize risks

What can an SME do to avoid being taken in by such attempts at fraud using fake identities (synthetic identity fraud)?

Processes:

• Install processes that check whether an order of or above a certain amount is genuine. This can be done by checking the delivery address given (does this match the buyer?) and the buyer’s identity, for example.
• Depending on the situation, ask for a substantial payment on account, especially if it is a new business relationship.

Payment:

• Define payment deadlines and stipulate them in your general terms and conditions.
• Use established payment channels such as banks and credit card companies.
• Monitor your outstanding payments regularly.

Safeguard against residual risk

Despite preventive measures, there is always a residual risk. This is why it’s important to protect yourself accordingly. Helvetia recommends that every SME have cyber insurance. Among other things, it is then covered for financial losses incurred as a result of cyber fraud such as the fraud attempted using a fake identity in this case (synthetic identity fraud).