Several customers I’ve recently spoken to have echoed a very similar concern. There are tons of effective fraud prevention solutions on the market for selling to consumers. But when it comes to B2B channel fraud, there’s a distinct lack of options.
This bears out in my personal experience working in fraud prevention for credit card companies and financial institutions. I’ve always seen very robust capabilities on the consumer side. But the teams responsible for corporate side didn’t have the same infrastructure that we relied upon.
How are fraudsters approaching B2B channel fraud?
Here’s how it breaks down:
B2C: High transaction volume, lower value. Fraudsters monetize by purchasing several items of varying value at scale.
B2B: Lower transaction volume, very high value. Fraudsters are maximizing up-front effort to generate higher returns.
Recently, I met with a customer who sells computer hardware and uses Emailage to assess transactional risk in both B2C and B2B channels. Their observations were intriguing and highlight the very different approaches taken by organized fraudsters.
In the past few months, this customer’s team has observed an uptick in B2B fraud attempts. What they have learned is two-fold: The main tactic is very similar to synthetic ID fraud, where fraudsters are creating fake “companies” that appear to be legitimate. The second approach is to take over and exploit dormant corporate domains, which can very easily seem low risk to many types of fraud controls.
This occurance isn’t just limited to the US market. I’ve spoken to financial institutions in the EU that are noticing very similar trends. In their case, fraudsters are spoofing corporate emails by creating domains that appear very similar to a given client’s business domain. They will then try to initiate transactions using instructions sent to these fake email addresses.
While these attacks represent low volume, the high transaction amounts involved represent a very serious risk exposure. One bad transaction could represent the full budget for the whole year on that account.
How we are fighting back
To thwart B2B channel fraud attacks, we look at corporate domains in a different way. First, we differentiate all domains between corporate and webmail or other types of “free” emails. Then, we consider how long the domain itself has been active. These elements, combined with the activity of that account can tell quite the story.
We also monitor fraud incidents associated with that domain compared to the overall activity and transactions that we process for that domain. So in a situation where a dormant domain is taken over and rapidly employed by an organized fraud ring, we’d see those signals very quickly and flag them as high-risk.
Another variable we look at is whether the name of the individual associated with transactions is the true owner of that email account. This process ensures that it’s actually a valid and active corporate email account
To help distinguish the scenarios I’ve outlined, we are now implementing additional signals in our API, so that we can build even more precise models that can detect and prevent risky activity in B2B channels.
As fraud prevention professionals, we are used to fraudsters and their low-effort scams. But these trends point to another evolution, where fraudsters are willing to put more effort up front to maximize the value of their returns in a lower amount of transactions. Keep an eye out, as this is certainly a trend to watch.
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