Baltimore Loses Over $803,000 to Fraud Involving Vendor Payments | PYMNTS.com

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The City of Baltimore misplaced over $803,000 when a fraudster diverted two of town’s digital fund switch (ETF) funds supposed for a vendor to one other checking account.

One cost valued at over $721,000 was retrieved by town, whereas the opposite one valued at over $803,000 has not been recovered, the Office of the Inspector General of the City of Baltimore stated in an investigative report synopsis launched Wednesday (Aug. 27).

The OIG discovered {that a} fraudster gained entry to the seller’s account for town’s procurement and provider platform, modified the seller’s financial institution to the fraudster’s financial institution on the platform, and obtained the 2 EFT funds from the metropolis on Feb. 21 and March 10, in accordance to the report.

“The investigation revealed a lack of internal policies and procedures in AP [the city’s Department of Accounts Payable] regarding supplier verification,” the report stated.

According to the report, OIG beneficial that AP create a listing of approved customers for provider accounts, present employees with coaching in dealing with provider financial institution data and recognizing indicators of fraud, and develop insurance policies that require quick reporting of suspected fraud or theft to the AIG.

In an Office of the Comptroller response to the report, the division stated it concurred with the OIG’s evaluation of the incident.

Following the incident, it applied reforms overlaying provider contact and banking updates, safeguards for the procurement and provider platform, and enhanced verification and oversight, in accordance to the response.

“Our office will continue to evaluate opportunities for systemic improvement and share lessons learned with other City agencies as part of a broader risk management strategy,” the response stated.

The PYMNTS Intelligence and Finexio collaboration “Winning the Fraud Fight: How AP Automation Can Deflect Rising Security Threats” discovered that accounts payable departments are more and more susceptible to fraud as cybercriminals assault extra companies.

According to the report, 96% of firms skilled at the very least one fraud try in 2024, up from 56% the earlier yr, with 94% reporting a number of assaults.

PYMNTS reported in September that fraudsters are capitalizing on the truth that the bill, whether or not it’s digital or paper, represents certainly one of an organization’s most tasty assault surfaces.

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