Be on the lookout for Fraudsters!


Hello again. In part one of our five-part blog series, a voyage of the customer life cycle, we set sail acquiring and qualifying customers. This week we examine effective risk management strategies.


The presence of pirates on the high seas plagued seafarers of old and even threatens modern-day ship captains. It’s much the same for credit managers who must be wary of pirates of another sort – fraudsters.

Fraud at the business-to-business level continues to be a serious problem and a challenge – fraud-related costs for U.S. businesses are more than $50 billion annually – that needs to be addressed by companies that want to grow their business while minimizing risk.

Once a fraudster successfully opens a small-business account, it can take months to detect the fraud occurrence. And fraudsters have become smarter, bolder and more opportunistic and are more likely to attack businesses that have the weakest defenses.

Quite simply, all of the credit analysis tools in a credit manager’s arsenal depend upon the financial information about and most often provided by a prospective customer. So if that data, ranging from basic contact information to accounts receivables, asset evaluations and other data, is fraudulent, the analysis will be unreliable. Consequently, the best place to begin fraud detection is very early on in the customer lifecycle.

Fraud detection depends upon having the commercial entity and the owners of the company properly authenticated. However; verifying business information is more complex than verifying the identity of an individual. With the possibility of multiple trade names, locations and guarantors, the costs of verification can quickly add up and limit operational efficiencies.

Fortunately, a sizeable portion of small-business fraud can be identified through simple demographic verification. Another second basic step to take is to identify repeat offenders. Many of these perpetrators provide the same business-related information time and again. Detect them by checking applicant and application details against known frauds.

Given that fraud is also on the increase in faceless channels, such as the Internet, organizations may consider implementing additional risk-mitigation tactics. Finally, consider using analytics to separate suspect businesses and business owners from those that don’t exhibit fraud characteristics in order to set fraud risk tolerance levels.

Staying shipshape:

In order to stay competitive in today’s fast-paced marketplace, credit managers will benefit from using an automated fraud-detection resource that provides reliable information and reduces approval time.

From the logbook:

Research shows that Experian customers reduced the incidence of commercial fraud by identifying business owners with a history of establishing new business fronts for the sheer purpose of conducting fraud, an unfortunate yet growing problem in these challenging economic times.

Business-to-business fraud is on the rise. A well-executed fraud strategy – one that blends business and consumer data – can improve fraud detection and operational efficiencies, leading to the reduction of costs related to small-business account acquisitions. And that makes for smoother sailing ahead.

We always love to know what you’re thinking, so please send us your comments or questions below or send us a message on Twitter @experian_b2b.

For more information about Experian’s advanced business-to-business credit risk management products and services, please visit

Managing the Customer Life Cycle

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