In the first article in this series, we looked at a bright new world of vendor and accounts payable relationships in real estate, ushered in by payment automation. Now we’d like to enlighten you further about how to fight back against real estate payment fraud.

Few industries have a more overwhelming volume of invoices, checks and vendors than real estate. It’s little wonder CFOs and AP teams in this space feel vulnerable. We said it in the title, and we’ll say it again: Payment automation is your AP team’s best weapon against real estate payment fraud and it’s three-pronged, like a trident. It stops bad actors in their tracks by removing the risk of checks, validating your vendors and securing your vast, sprawling network.

87% of companies reported an increase in fraud in 2020.

Strategic Treasurer

An increasingly sophisticated threat

You know the drill. You or a member of your AP team might receive an email from what looks like one of your trusted vendors. They ask that future payments be made into a new bank account. System details get updated and future payments are then made to the perpetrator, and by the time you realize you’ve been had, it’s too late. Or perhaps a fake supplier email demands payment for goods that were never received, asking you to pay up. In reality, of course, it’s an imposter.

We say of course, but it’s very hard to decipher fact from fiction when it comes to fraudsters. It’s not obvious because the email address often seems legitimate both at a glance and after a second look, the sense of urgency instilled in the wording persuades you to act quickly. Then the invoices themselves are so convincing, there’s little reason to doubt their veracity, especially if they look and feel like ones you’re used to getting.

Left, right and center

On paper, or just saying it aloud, it all sounds so obvious. But it’s a minefield for CFOs and those in AP. And that’s because those grenades are hurtling in from all angles: fake billing schemes, expense reimbursements, check tampering and ACH fraud. The perpetual threat volley, coming at you left, right and center no doubt keeps you awake at night — and rightly so. Real estate payment fraud is increasing in virulence and volume. Even if you haven’t been a fraud victim yet, it’s likely you’ve been a target of attempted fraud.

The time has come

We are not trying to scaremonger, but we want to show you a more secure way. By replacing manual, paper-based processes with modern digital ones that have multi-layered defenses and early detection built-in, CFOs and AP teams will immediately become better protected against fraudsters. Now we’ll explain a bit more in detail about that three-pronged attack.

Global losses from payment fraud tripled from $9.84 Billion in 2011 to $32.39 in 2020.

Merchant Savvy

Remove risk by removing checks

By using paper documents and checks, AP teams are basically putting out a big, bright welcome mat for all fraudsters. You might as well open the door and say ‘come on in!’ Checks are inherently risky, yet many real estate and property companies are still completely reliant on them.

We know checks are not the future of business. We know you are hungry for growth and want to be moving forward — not stuck in a checkered past. It’s therefore time to say goodbye to checks and slam the door in the face of fraudsters.

Here’s how: payment automation moves your vendor networks from checks to ACH and virtual card payments. And with that, helps reduce an enormous amount of liability, minimize fear, uncertainty and doubt (FUD) and help preserve those all-important vendor networks. Digital payments are also convenient and super speedy. But we’ll save the benefits of that particular perk for another time and article.

The vendor validation wall

Our own efforts to prevent fraud within our payment automation network led to the development of proven security processes, which are rooted in rigorous vendor validation. Paymode-X is designed so that only an authorized party at the vendor end can make changes to their membership and information about the receiving bank. We carefully vet those users before they’re ever given access to the platform.

If a vendor were to call or email the payer and ask to change bank account information, the payer would instruct the vendor to change the information directly in their Paymode-X account. In effect, it creates a digital identity and authentication wall to protect against Business Email Account (BEC) compromise and other common types of fraud.

Securing the network – human and automated

With such a large transaction volume in real estate management, there is good reason to be security conscious. Above all, for CFOs and AP teams it has to start with securing your network. Or – let us do it for you. We’re not going to get into specifics because it could make the job of protecting you more difficult. But, high-level multi-factor authentication, exhaustive behavioral analytics, and savvy use of a host of digital tools all combine to create deep defenses. Put simply, to compromise an electronic payment network membership, a fraudster would have to compromise multiple different layers and bypass an array of fraud protection — both human and automated.

When we talk about the threat of payment fraud, it’s not just the reputations of real estate organizations that are at stake, financial losses can be catastrophic and reverberate in your organization for years after an incident. We know AP teams and CFOs want to concentrate on boosting revenue and are hungry for growth. By relegating fraud risk to the wings, growth can now become the protagonist of your real estate business story.

We’ll tell you more about the revenue potential of payment automation in the third article of this series, AP Automation fuels ROI in commercial real estate.

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Posted by Chris Gerda

Chris Gerda serves as the head of risk and fraud prevention at Bottomline, with a focus on security for Paymode-X. He is responsible for the overall anti-fraud strategy and technology initiatives to maintain the security of $200 billion in payments within the 450,000+ network membership base.