The United States Postal Service reports that every year businesses pay out millions, and potentially billions, of dollars to phony invoice schemes. Scams may go on for months or even years before victims discover the problem.
Who falls for these scams? An initial guess might suggest that it’s small businesses with unsophisticated accounting methods and practices, but the reality is much different. For example, Conde Nast, a major publishing company with about $3 billion in annual revenues was the victim of a $7.9 million phony invoice scheme. And, Best Buy whose revenues exceed $50 billion, fell victim to a $900,000 scheme in 2011.
But make no mistake, small businesses are often victims, too. Of the billions of dollars that the United States Postal Service suspects is paid out to scammers annually, the majority comes from small and medium-sized businesses. Small business owners are often mired down in too many activities to truly scrutinize every invoice they receive and in many cases simply will pay a small invoice because it SEEMS legitimate and it would be too time consuming to properly investigate its validity.
And medium sized businesses are often growing at a pace that is difficult to keep up with. As a result, they are often understaffed and placing a great deal of pressure on their workforce. A payables department under stress is less likely to have the time to truly analyze every line item on every invoice. As a result, some phony’s slip through the cracks and never get noticed.
Think about it. Every day, criminals are out there mass mailing, faxing or emailing your company in an effort to make easy money. Somewhere they are sitting on a yacht, enjoying a beautiful day all courteous of you. If that makes your blood boil, you are in good company.
Follow our blog for information on new invoice scams, scammers’ techniques, and tips to identify and avoid current phonies: PhonyInvoices Blog.