A Comprehensive Guide for Businesses to Avoid International Payment Fraud

Payment fraud can come in various forms. Some might involve fancy technology, but most scams involve a simple deception. Knowing the common tactics can help you catch anything suspicious early on.

3 mins read
11th December 2023
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Leatherback Content Team


"Wait, our payment hasn't reached you?" 

Your heart drops as you realise your international supplier didn't receive the payment you sent through an agent. Trying to sort it out, you discover a third party has altered the supplier’s financial institution’s account details. 

This type of crime affects many people and businesses globally. Shockingly, 71% of businesses experienced payment fraud recently, with European businesses losing an average of 3% of their revenue to these scams.

Unfortunately, many companies are unaware of the risks they face when dealing with international transactions. Understanding the risks involved is essential, and taking proactive steps to protect yourself from potential financial losses is also necessary.

In this article, we'll cover everything you need to know about international payment fraud, including its various forms, and provide tips on securing your transactions to avoid losing money.

What are the common types of international payment fraud? 

Payment fraud can come in various forms. Some might involve fancy technology, but most scams involve a simple deception. Knowing the common tactics can help you catch anything suspicious early on. 

Now, let's find out the different types of fraud small and medium-sized businesses often face when dealing with international payments.

  • Fake invoice fraud: Invoice fraud is a big problem in international payments. It happens when scammers create fake invoices to make businesses send money to the wrong accounts. These scammers are clever and use different methods to achieve their aim.  One way is by changing the supplier's details on the invoice. The payment team sees the invoice, trusts the details, and sends the money. The scammer gets away with the money. They can also make up invoices for things that were never really bought or pretend to be partners in the business. 

You might wonder, “How can they pull this off?” These scammers are clever – they search for information about your business on your company website and even on employees' social media. With this info, they create fake invoices, making it easy for businesses to fall into their traps.

  • Business email compromise: Scammers on the internet can also hack into a company's email to steal money or get secret information. Here's how they do it: first, they learn about who the company works with, like suppliers. Then, they pretend to be one of those trusted suppliers. They send an email that looks just like the actual supplier's emails, saying they have new bank details for getting paid. The company's money people, thinking it's a normal update, change the payment info.

The money goes to the scammers instead of the real supplier. By the time anyone figures it out, these scammers have the money, and the actual supplier is left without payment. 

  • Man-in-the-middle attacks: In this type of international payment fraud, hackers alter communication between two parties, often during financial transactions. Let’s say you want to send money to your international supplier. Then, a scammer finds a way into the messaging system and changes the details of where the money is supposed to go. So, the money ends up in the hacker's account instead of reaching the right place. That's why it's important to have strong security to stop them from messing with important messages and transactions. 

  • Identity fraud: In this type of fraud, scammers pretend to be the CEO or another top executive, urgently asking for a payment. They use publicly available details, often from the executive's social media, to make their request seem believable.

Not too long ago, a criminal found out about the CEO's visit to a major overseas supplier through a social media post. The scammer tricked the company's treasurer into making a big payment using that information. The excuse? The CEO closed a significant deal for massive raw materials during the overseas visit. 

  • Ransomware attacks:  This happens when a hacker sneaks software into a company's computer systems and locks up all the important data. Then, the hackers behind it demand payment to set that data free.

It's not just an inconvenience; it's a serious digital threat that can disrupt your business, and the hefty ransom demanded can hurt your finances. 

Why does international payment fraud happen? 

Sending money internationally to countries like the US, China, UK or Canada involves many moving parts—multiple parties, various steps, and different currencies. At each step, there's a chance for criminals to take advantage.

Also, because more and more people are using online banking and payment platforms for international transactions, it gives fraudsters more chances to trick people. Being unaware is another factor, too. Some businesses, especially those new to international transactions, might not know the risks. Not knowing makes them an easier target for different types of fraud.

Lastly, some businesses might not have the best security measures. This could mean not enough protection, like weak passwords or employees who aren't trained to spot fraud.

That's why using a secure platform like Leatherback is a good idea. We ensure all communication channels are safe and encrypted, protecting your information. Leatherback has also implemented security measures in line with regulatory practices and industry standards to protect your transactions. 

How to avoid international payment fraud as a business owner? 

Now that you know about the common types of international payment fraud, let's discuss clear steps to protect your business:

  • Educate your employees: Regularly train your team, especially those handling financial transactions, to recognise phishing attempts, social engineering, and other types of fraud.

  • Limit access to sensitive information: Strengthen internal security by giving access to critical financial information only to those who need it for their specific roles. This reduces the risk of breaches.

  • Always cross-check emails: Always double-check emails related to financial transactions. Confirm the sender's identity and any changes to payment details through a separate, secure channel.

  • Conduct due diligence on partners: Before engaging in international transactions with new partners, suppliers, or clients, thoroughly verify their legitimacy and establish secure communication channels.

  • Stay informed: Stay vigilant about the complexities of international transactions and keep up with potential risks and fraud tactics. Knowledge is a powerful defense against scams.

  • Enable 2FA: Two-factor authentication is an extra layer of security that makes it harder for fraudsters to access your account.

Leatherback: ensuring your business payments are secure

The final step in avoiding international payment fraud is choosing a reputable payment service provider like Leatherback, authorised by regulatory bodies such as the UK Financial Conduct Authority (FCA), FINTRAC in Canada, and the National Bank of Ethiopia. 

We implement solid encryption across all communication channels and security controls to protect your money and information. Click here to read about the security measures we’ve put in place for you. Our solution-focused website app lets your team securely handle international transfers and currency conversions. Create an account here

For more information about how to explore or get started on the Leatherback website app,  contact us at Stay in touch and keep abreast of financial tips and resources via  LinkedIn, Instagram, Facebook, and Twitter.

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