Combatting Rising Fraud in the B2B Sector. How Fintech Solutions Can Help.

Taking Serious Fraud Seriously

According to The Global Fraud Report 2024, almost every 10th order of goods or services is fraudulent. 3.3% of all orders accepted by merchants were fraudulent. While 5.8% of all orders were rejected due to suspicion of fraud. According to the merchants who participated in the survey, the main reason for such a high level of counterfeit transactions is gaps in fraud detection tools and capabilities. No wonder that over 60% of them are willing to spend more on fraud tools in the next 2 years and this clear request is predicted to result in fraud detection and prevention market growth from $50.72 billion in 2024 to an astonishing $61.01 billion in 2025, according to The Business Research Company latest report.  

Catch me if you can

Fraudsters are constantly searching for vulnerabilities in businesses' defenses, while companies strive to reinforce these weak points and build stronger barriers. This ongoing process can be easily described as a spiral evolution. Now we’re at the beginning of another development cycle, and here’s why 

The COVID pandemic has changed the commerce landscape, forcing more and more businesses to adjust and go online. This growth worked as a magnet for fraudsters who began targeting e-commerce businesses more and more. Based on the recent statistics, almost ¼ of all purchases in 2024  happened online, and the number of different types of fraud experienced by the average merchant in the same year rose from three to four compared with 2023. The increased number of sham transactions is not only fueled by the number of scammers but also by AI possibilities that are used to create highly believable deepfakes, credible messages, and synthetic identities at a scale. 

2024 Champions

According to the Global Fraud Report, the most common fraud types that were prevailing in 2024 for eCommerce were:

• Refund/Policy Abuse

• First-Party misuse

• Phishing

• Card Testing

• Identity Theft

However, refund/policy abuse, phishing, and card testing” scams are more common in B2C eCommerce than in B2B, if we exclude them, we will get our champion podium where first-party misuse is in the first place.

First-Party Misuse

From the B2B eCommerce perspective, this fraud type involves a company that intentionally misuses an eCommerce system for personal gain. Systems, where merchants offer Buy Now Pay Later products or Invoice payments, are more likely to face First-Party misuse.  

This is one of the possible scenarios based on a real-life case: a scammer registered a shell company and achieved high credit ratings by submitting false financial statements to Companies House. This process was engineered over more than four years to achieve a low-risk status. The company then goes through a change in director or registered address. and credit lines are quickly amassed against the low-risk credit score with no intention to repay.

From this example, we can conclude that merchants who want to offer credit lines cannot rely purely on credit bureaus to gain risk scores. Even such a well-known FinTech as Experian (included in the top 10 in 2024 of FinTech companies according to IDC version) which is largely used by other financial institutions for risk assessment and stores massive data about the company does not use all of it for risk score calculation and have some gaps that fraudsters can use. It’s more likely that a niche FinTech that combines data from different sources to provide more accurate risk assessment, constantly monitoring fraud cases and adjusting its system to cover them in the future, will suit eCommerce better than the ‘one solution to everyone’s approach provided by global players.

Identity Theft

To get access to a person’s account, a fraudster must obtain private data. But what if it is already publicly available? This might sound quite frightening if we’re looking at this from the B2C perspective, as it would mean a huge personal data leak, but for B2B, it is quite common: all companies have to be registered in Companies House and provide information about their address, board members, and shareholders. Moreover, social media often has good-quality images of people with significant control in the company. This might be enough for a skilled fraudster to impersonate the company. 

To prevent this type of hoax, merchants can: 

• Introduce identity verification steps as part of an onboarding or payment process. It can be done via either 

  • Know Your Customers solutions that require provisioning of ID proof documents and a Selfie check ( See current Juniper research that covers FinTech leaders in this area)      

  • Proof of access to the company’s bank account. The verification will include a transfer of a small sum of money to the company’s bank account and requires the user to enter the exact value of the transfer

  •  Proof of access to the corporate card: the validation process will require transferring a small amount of money from the corporate card to the merchant account which will be later refunded.

• Confirm the relationship between the user and the company

  • If a user claims to be the company director, this can be confirmed by checking the data provided in the Companies House official registry

  • If a user claims to be an employee, it can be verified by checking their email domain 

• Introduce a 2FA system where only verified users related to the business are granted permission to approve payments.  

• Introduce monitoring of customer ordering behavior. (Sardine FinTech is one of the providers of such solutions)

Seeing that merchants are prepared to increase their anti-fraud tools and capabilities’ spending by an astonishing 20% in the next year, there is certainly hope for improvement.