While practice owners and managers must always be vigilant, two specific types of financial fraud tend to peak at year end. They are hoping to take advantage of increased patient and payment volume, as well as more incoming payables and invoices.
Invoice Fraud – The EXTERNAL Threat
A variety of bills hit your practice at the end of the year. In many cases, the normal volume of incoming bills and invoices may actually more than double, as annual renewals, regular recurring bills and even bills for services, rents or materials to be incurred in 2016 are often sent early to allow business owners the opportunity of paying early (before the new year) to take advantage of possible 2015 deductions (check with your CPA on which ones are legally allowable). This volume creates opportunity for criminals and unscrupulous vendors to submit false bills, inflated bills, or duplicate bills.
Scammers submit bills in varying amounts for just about every expense your business would logically incur including printing, insurance, licensing, supplies, insurance, and even taxes, labor standards violations and other scary sounding government agency administrative fees. In some cases, the invoices are overtly fraudulent, billing you for goods and services you never received or ordered with vendors you don’t actually deal with.
More sophisticated scams are subtler, they may use the names of vendors you actually deal with and simply substitute their own addresses or phone numbers for payment. Also, they may imitate a popular vendor in your area, (i.e sending you a bill from Minnesota Medical Products instead of from your actual vendor, Minnesota Medical Supply, fictitious examples). Make sure the person paying your bills is extra vigilant and employing safeguards like matching invoices and account numbers you usually use to the bills they pay and by confirming the receipt of certain purchases and deliveries.
A Few Badges of Fraud To Look Out For
- Calls, emails or letters asking for updated payment or credit card info, especially if the card isn’t expired. Many scammers get numbers just by asking.
- Spoof websites, malicious links in emails and attachments from unknown vendors or creditors. Opening a simple PDF can let them have everything in your computer, including patient information. If you haven’t read my articles on why you must have data breach and EPLI insurance , I suggest you do so today.
- Invoices from known or unknown vendors and bills from out of state or out of the country for goods and services delivered locally.
- Phone numbers and addresses that are wrong or unverifiable.
- Bills, correspondence and websites with serious grammatical and spelling errors, photocopies or otherwise unprofessional looking markings.
- As series of invoices with consecutive numbers from the same vendor (are you the only client?), as well duplicate invoices or invoices in amounts or frequency outside your regular spending pattern.
Once the money is gone the chances of your recovering it are minimal, so you must practice “preventative medicine” in this area and try to avoid the exposure before it happens. It could get much worse than just losing the money you sent out as payment on a fraudulent invoice. The criminals you paid may also be in possession of either a check with your practice’s name, account number routing number and etc. or credit card number and all required associated billing details like the verification code, expiration number, and address. To avoid an invoice scam morphing into further business or identity theft, check your personal and business credit at the end of the year (and several other times a year) and immediately investigate and formally dispute any unauthorized charges debits and withdrawals.
This list isn’t complete, crooks are innovative and always looking for new ways in, but it’s a good start of external invoice fraud and related issues to review with the bill payer at your practice. Our next discussion will address the internal risks your practice faces at this time of year, including ways to spot and prevent the fraud, theft, and embezzlement that can start inside your office.