Businesses of all sizes, particularly e-comm SMBs, rely on cross-border transactions to thrive in today’s global economy. As borderless opportunities continue to grow, threats have also been on the rise.

Scammers are on the move, but you can be a step ahead.

Cross-border payment scams have been on the rise in recent years. According to a study by the Association for Financial Professionals (AFP), the percentage of companies that reported being victims of payment fraud increased from 62% in 2014 to 70% in 2019.

Zooming in on small to medium enterprises (SMEs) and marketplace sellers in the US, a recent survey of 300 US-based small businesses by the Association of Certified Fraud Examiners (ACFE) reveals that 22% reported that they had fallen victim to a cross-border payment scam when dealing with global suppliers. The Covid-19 pandemic has also created an environment where more businesses are relying on remote communication and payment methods, making it easier for scammers to exploit vulnerabilities in cross-border supplier payment processes.

Knowledge is power, so here are the top 5 most common cross-border payment scams to watch out for.

Fake Invoices Scam

One of the most common cross-border supplier payment scams is the fake invoice scam. Scammers send false invoices to businesses for goods or services that were never ordered or received. These invoices look legitimate and may even have the supplier's logo, but they contain inaccurate or false information. Once the business pays the invoice, the scammer disappears, leaving the business out of pocket.

In 2019, a company in the US received a fake invoice for $150,000 from a supplier in China. The invoice looked legitimate, so the company paid it. The supplier disappeared along with the company’s money.

Advance Fee Scam

In an advance fee scam, a scammer poses as a supplier and asks for a deposit or an upfront payment before shipping goods or providing services. Once the business pays the advance fee, the scammer disappears, leaving the business with no goods or services and no way to recover the money.

A small business in the UK wanted to order goods from a supplier in India. The supplier asked for a 50% deposit upfront, which the business paid. The supplier disappeared, and the business lost £10,000.

Overpayment Scam

In an overpayment scam, a scammer will overpay an invoice and ask the business to refund the difference. The scammer's payment will often bounce, but the business will have already refunded the overpaid amount, leaving them out of pocket.

A small business in Australia received a payment of $10,000 from a supplier in Malaysia. The supplier claimed that they overpaid and asked for a refund of $5,000. The business refunded the overpaid amount, but the original payment bounced, leaving the business out of pocket.

Phishing Scam

A phishing scam is a type of fraud where a scammer will pose as a legitimate supplier and ask for sensitive information, such as bank details or login credentials. Once the scammer has this information, they can use it to steal money or data from the business.

In 2020, a small business in the US received an email that appeared to be from their supplier in China. The email asked the business to provide their bank details to update their payment system. The business provided the information, and the scammers used it to steal $50,000 from the business.

Shipping Scam

In a shipping scam, a scammer will pose as a shipping company or customs agent and ask for payment to release goods that have been held up in customs or shipping. Once the business pays the fee, the scammer disappears, leaving the business with no goods and no way to recover the money.

A small business in Canada ordered goods from a supplier in Mexico. The goods were held up in customs, and the business received an email from a fake customs agent asking for payment of $2,000 to release the goods. The business paid the fee, but the goods never arrived, and the business lost $2,000.

Navigating Uncertainties: A Trusted Payment Partner is Key

Learning more about payment scams is only winning half the battle. Some simple steps such as verifying invoices, conducting due diligence on suppliers, and using secure payment methods can go a long way in preventing these scams. But for small businesses, verifying every invoice from suppliers all over the world can be very costly and time consuming. This is where a trusted, low-cost payment partner like PingPong Payments comes in.

As a trusted payment service provider, PingPong offers a secure and reliable platform for businesses to make cross-border transactions without the fear of payment scams. With a verified network of suppliers and partners, PingPong ensures that all transactions are authentic and free from fraudulent activity.

With the banking world currently in turmoil (the SVB crisis, for example), having a safe and secure alternative global payments partner is important. PingPong is backed by the most trusted global financial institutions, so it continues to exist as a network of trusted partners. Joining PingPong means joining a safe space where every transaction is transparent, verified, and protected every step of the way.

Indeed, cross-border supplier payment scams and frauds are a growing threat to businesses of all sizes, but this doesn’t stop any entrepreneur from going global. By educating yourself and partnering with a secure payment platform, you’ll never become a victim.

Do You know?

PingPong has safeguarded more than 15 billion in capital for 1,000,000 customers around the globe. PingPong invests a substantial amount of time and capital in acquiring the licenses we’ve obtained from regulators in the countries where we operate. Each license is a stamp of approval to reassure you that we’ve met the rigorous protocols those regulators require for handling your money.

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