What you need to know about B2B fraud 

With 4.6 million people in the UK affected by fraud each year, it’s not surprising we hear about consumer experiences of fraud almost every day

But we rarely hear about business-to-business (B2B) fraud despite B2B businesses being goldmines for fraudsters. 

B2B fraud isn’t new, but with more at stake companies are less keen to talk about being caught out which is why the scale of the problem is only just being realised. B2B fraudsters can create losses that hit a company’s bottom line so badly they never recover, and with B2B fraud prevention lagging behind the consumer solutions, they represent easier pickings, so businesses need to get vigilant. 

Common types of B2B fraud  

The tactics fraudsters use to target B2B are very similar to those a consumer might be at risk from. For example, fake accounts. Setting up bogus businesses is a common scheme we’ve seen via our B2B customers. To put it simply, fraudsters will create a fake company, become a customer, and then steal from you.  

B2B fraudsters will use social engineering techniques, forged documents, fake websites, and data manipulation to pass business credit checks. Then once they’re an approved entity they can open a business account and purchase goods and services but disappear and never make a single payment. Or they might max out or exceed all credit lines and then abandon the account. 

Our customer Pitney Bowes, a global shipping and mailing company that provides technology, logistics, and financial services, has experienced fraudulent actors doing this on a small and large scale. 

Fraudsters can target small credit lines for postage and shipping where they print stamps or labels for free and use them in wider fraud schemes to save on operational costs/maximise profits. Or they can go for gold and target its equipment financing service, where credit lines are provided for applicants wanting to buy equipment like medical machines or construction tools.  

The value of one transaction can range from a few thousand dollars to a few hundred thousand, so there’s a lot at stake. 

Business identity theft is another iteration of this fraud method. Instead of starting from scratch, a fraudster will pose as an owner of a legitimate company to gain access to credit or get physical goods to resell. 

Unfortunately, it’s all too easy to get hold of the necessary information to impersonate a business leader thanks to platforms like LinkedIn – I urge all business leaders to take another look at the information they’re sharing! 

The business impact of B2B fraud 

Fraudsters with personal and business information at their fingertips can then cause business misrepresentation, meaning the fabrication, exaggeration or deletion of business data leading to altered employee, financial or third-party information. 

Employee or customer accounts can also be compromised. With account takeover, fraudsters can harvest data and sell it on the dark web or launch phishing and malware attacks to cause more damage. And the resulting effects on reputation can be catastrophic. Once news spreads that a business has been defrauded, it takes a lot of work to win back customer and supplier trust and the long-term financial performance of the business can be gravely affected. 

What B2B businesses need to do 

Not enough B2B business leaders see fraud as a priority. And there’s the misconception that fraud solutions will increase friction for customers and reduce profits. In fact, it’s the opposite! Fraud mitigation helps a business to mature and reduces loses. Fraud prevention must be seen as a form of revenue generation, rather than transaction blocking. 

B2B companies need to recruit a specialised fraud team to spot fraud trends and indicators and invest in a fraud solution that can be customised to a business’ unique needs, risks, and budgets.  

Using an off the shelf solution meant for a B2C business can lead to the friction that is so feared. For example, genuine transactions might be flagged as fraudulent due to higher order values or quantities. But with a tailor-made, AI-powered solution built on an organisation’s own unique business model, operations, data and pain points, organisations can quickly identify risk factors, determine genuine transactions, spot suspicious anomalies, and defend customer accounts. This is the best line of defence against B2B fraud and businesses need to act now. 


About the Author

Mairtin O’Riada, co-founder and CIO at Ravelin. Ravelin provides sophisticated technology and dedicated support to help online businesses prevent advanced fraud threats and accept payments confidently.

Featured: ©Billion Photos

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