In addition to the standard reporting agencies, including Dun & Bradstreet, Equifax, Experian, PayNet and LexisNexis, social media can be an important verification tool. Alternative databases, such as those maintained by DirectID and GIACT, contain bank and tax information as well as business utility and telecommunications payment histories that can also help to authenticate equipment finance customers before moving on to the final stages, where equipment is delivered and funds are transferred. Other sources of business listings, such as reverse phone directories, Secretaries of State, Better Business Bureaus and professional listings, including Martindale Hubbard and medical licensing bureaus, also can be useful for verifying businesses.

Vendor Funding and Transaction Completion

Not all equipment finance fraud occurs exclusively on the customer side, of course. Fictitious vendors are a concern, as are real vendors that seek to defraud equipment finance companies, whether acting alone or colluding with other vendors or customers.

To authenticate vendors, we use the same methods as for customers, though often with different databases. We also obtain executed vendor program agreements and ensure that our origination partners are either major manufacturers or authorized partners of major manufacturers.

Speaking of agreements, today’s equipment finance documentation is increasingly electronic in its entirety. So are payments. The paper trail is often incomplete or even nonexistent. To prevent fraud in this stage of the transaction, we rely on secure digital document and signature technology as well as thorough examination of vendor invoices and supporting documents. We also confirm that all wire transfers are routed to legitimate bank accounts of authorized vendors.

Continuing Education

Fraud prevention in the digital age still requires a lot of old-fashioned human discernment and detective work. It also requires a cultural shift supported by continuing education. At its best and most effective, equipment finance fraud prevention isn’t a phase or a discrete activity. It’s a mindset instilled company-wide.

Sales, credit, documentation, receivables management, accounting and funding – every team member working in every department must be trained to spot known fraud patterns and modalities. They need to be kept up-to-date on the latest techniques and taught to be vigilant for red flags, such as these and others we train our employees to watch for:

• Do billing and equipment locations match records?
• Does the business maintain a landline?
• Did the obligor sign as agent?
• Could this be a brokered transaction?
• Are there multiple recent UCC filings or credit bureau inquiries?
• Are invoices properly itemized?
• Is the dealer in the same geographic area as the obligor?
• Is the vendor financing equipment it isn’t authorized to sell?
• Is the same transaction being submitted by multiple vendors?
• Does the size of the financing request match the size of the business?

Of course, this list isn’t complete. In a constantly evolving threat environment, it never is. And that’s why we need to band together against equipment finance fraud. In the end, the best defense is one mounted by an entire industry committed to sharing its experiences with digital fraud so that we can respond in a concerted, collective and effective way to every threat, wherever it originates. Attacks on one of us are attacks on all of us.