Surge in fraudulent credit applications – how you can avoid becoming a victim
18 November 2020 | Web Article Number: ME202021327
WHETHER you are a person who keeps a low profile or a company in the limelight, anyone can be a victim of identity fraud and nothing demonstrates this better than the recent marked rise in businesses receiving fraudulent credit applications.
That’s according to Christo Snyman, Director at Mazars in South Africa and Vice President of the International Association of Financial Crimes Investigators (IAFCI) in South Africa, who has been made aware of this in several cases investigated accociation members over the past year.
Warning businesses to stay vigilant in light of International Fraud Awareness Week (15 to 21 November 2020), Snyman pointed to a recent case Mazars in South Africa investigated that involved one of their clients.
“It is common practice among many businesses to provide credit to companies that buy large quantities of stock from them. Customer businesses submit credit applications and, if approved, they can follow up with purchase orders. From our conversations with suppliers, we have discovered that the number of credit applications being made using false or stolen information, has become a massive problem.”
Snyman said his client’s information had been misused in exactly this manner. “Our client was contacted by a stationery supplier who informed them that they had received a credit application under said client’s name. This was quickly followed up by a purchase order totalling R105,315.
“Luckily, the supplier noticed a number of inaccuracies in the application and followed up before releasing any goods. Nevertheless, our client is still a victim of identity fraud, which can have a massive negative impact on them if the situation is not immediately reported and handled correctly.”
Snyman said this showed that there is a need for businesses to become more aware of the prevalence of fraud, and to act when they become aware of fraudulent activity.
“Firstly, if you conduct business on credit, never assume the accuracy of a client’s information – always check the validity of the information that they provide. Check that names and contact details are correct, and double check banking details by calling the applicant or customer. In the case of long-standing customers, be especially wary of changes in contact or banking details.”
In addition, Snyman said that all businesses must have a policy of reporting any fraudulent activity. “It is very unfortunate that so many companies still choose to let cases of attempted fraud go unreported. Even if it might seem unlikely that the fraudsters will be caught, it is still important to notify police.
“At the same time, businesses should let other companies in their network know if they become aware of a new scam, or if their identity had been stolen.”