Payment Transaction Fraud Among Key Risks to Business Operations – and Reputation

New research by Creednz in collaboration with the Ponemon Institute notes rising cases of payment transaction fraud are costing businesses more than just money

September 27, 2023 09:00 AM Eastern Daylight Time

MIAMI & TEL AVIV--(BUSINESS WIRE)--Payment fraud amounting to billions of dollars remains among the top risks to companies globally, with more than two-thirds of U.S. corporate finance departments reporting some sort of breach that has not only cost them money in the past 12 months but significantly harmed their reputation.

The data was released today in a report from Creednz, a platform that safeguards corporate finance teams from payment scams to prevent financial loss, alongside the Ponemon Institute, helmed by Dr. Larry Ponemon, a former senior partner at PWC and founder of the firm's global compliance risk-management group. Key findings included that 88% said their organizations had at least one payment transaction fraud in the past two years, while 76% of respondents say it took more than a month to more than a year to discover and remediate these incidents.

Beyond losing capital, the number one negative consequence following a fraud incident is reputational damage with business partners and consumers, with 60% of survey respondents reporting a hit to their reputation and brand. This is followed by non-compliance with regulations (51% of respondents) and loss of shareholders’ confidence (46% of respondents).

An additional negative: More than one-quarter of respondents said they fired employees that made the payments, highlighting the highly manual process involved in processing payments, and in turn the large margin for human error.

“A manual process leads to fraud, and those that get blamed are the ones who literally clicked the ‘send’ button,” noted Creednz Co-founder and CEO Johnny Deutsch. “It makes no sense in today’s world that technology isn’t being utilized and applied to prevent this in the first place. Creednz was built from the ground up to give finance teams the tools to fight back and protect against payment fraud and safeguarding corporate finances.”

“Our research revolutionizes this landscape by providing valuable insights for companies to recalibrate their risk focus. By shedding light on the accountability aspects of payment scams, we bridge the gap between finance and cybersecurity departments, revealing how these financial challenges squarely fall within the purview of corporate finance,” said Dr. Larry Ponemon, chairman and founder of the Ponemon Institute.

Other report highlights include:

• By 2028, the value of business transactions worldwide is expected to increase to $200 trillion, according to Deloitte’s 2020 B2B Payments for the Mid-Market;
• Sixty-one percent of respondents say payment policies are applied consistently without consideration of risk, location and the length of time the relationship has lasted;
• Sixty-eight percent of financial professionals do not believe their banks will verify and stop suspicious transactions;
• More than a quarter of respondents said they fired employees after fraud occurred, in most cases the individual and department that processed the transaction;
• Seventy six percent of financial professionals say they are concerned about the potential of fraud when making payments to regions outside of the U.S. and Canada.

Separately, Creednz is pleased to announce that it has finalized a $7 million fundraising round led by Blumberg Capital with participation from Elron Ventures and Moneta VC. The funds will be used for growing the team, continued product development and executing in the marketplace.

About the report:

“The Growing Risk of Payment Transaction Fraud” features insights and analysis from interviews with 659 finance executives representing 18 diverse industries across the United States who hail from corporations with average annual revenues in the $400 million range, and maintain supply chains averaging 2,800 suppliers.

This inaugural report marks a significant milestone in capturing the level of payment transaction fraud occurring among companies both in the U.S. and abroad, and provides industry statistics that until now have only been tallied using aggregate, less-granular data such as the FBI Internet Crime Reports (The IC3), which reported a staggering $50 billion in losses from scams like Business Email Compromise between 2013 and 2022.

About Creednz

Transaction fraud not only affects the financial well-being of businesses, but also damages their reputation, erodes public confidence, and can result in costly regulatory scrutiny. Additionally, recovering from fraud requires significant time and resources that could otherwise be allocated toward growing the business.

Co-founded by Rivian Automotive former CISO Johnny Deutsch and seasoned cybersecurity and technology expert and serial entrepreneur Moshe Elgressy, Creednz empowers finance departments with cutting-edge controls designed to combat the ever-evolving landscape of threats that pose risks of financial loss and more. While cybersecurity companies focus on data, Creednz focuses on protecting money.

Learn more at www.creednz.com

Contacts

Media inquiries: creednz@fullyvested.com or 416-322-2863