Private businesses warned about rise in fraudulent credit applications

Nothing demonstrates this better than the recent marked rise in businesses receiving fraudulent credit applications, 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 by IAFCI members over the past year.

Warning businesses to stay vigilant in light of International Fraud Awareness Week (15 to 21 November 2020), Snyman points 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.”

As Snyman explains, 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.” 

With this in mind, Snyman says that there is a very real 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 says 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.”

“Fraud and identify theft are rife in the country, and there are many organisations who actively try and minimise its effect on society. However, through the above measures, you would be contributing to fraud awareness and helping to combat fraud in South Africa,” Snyman concludes.