What is utility fraud?

Scams keep getting more numerous and sophisticated. You’re probably aware of the different invoicing schemes that exist to steal money and information from businesses. But did you know that some criminals target utilities? Utility fraud is when a person fraudulently uses someone else’s name or identity to order water, gas, cable or other types of services. Cable fraud is the most commonly committed utility scam. However, this type of fraud encompasses a wide range of schemes.

In March 2021, a Cumberland County, New Jersey, resident received a call they thought came from a local gas company. The representative asked them to purchase a prepaid card so they could pay an outstanding balance of $2,300 and prevent their gas from being shut off.

Criminals are getting creative…

Criminals are getting creative, so utility fraud can appear through several types of schemes. Some scammers operate online and use spoofed emails to steal payment information and other sensitive data. You can also find criminals who impersonate utility workers to gain access to homes and businesses to steal valuable items.

While fraudulent phone calls are a common form of utility fraud, it’s not the only one. In fact, in October 2020, the Suffolk County, New York, police department found that criminals had been posing as utility workers to gain access to homes and commit burglaries.

Utility fraud is sometimes related to identity fraud. If a criminal has access to your personal information, they can use it to open credit lines in your name, file a tax return, or turn on utilities at an address of their choice and get gas, electricity or even cable with no intentions of paying those bills.

With all of the schemes fraudsters enact, the best way to protect your organization is to be aware of the different ways they can use utilities to trick you.

Thankfully, there are steps you can take to protect your organization.

How does utility fraud affect your business?

There are different ways in which scammers can use this type of fraud to hurt your organization:

  • You might see recurring charges on your business credit card if a scammer uses your information to purchase cable or another utility.
  • If you fall for a scammer impersonating a utility company over the phone, they could steal your payment and other information and use it to make purchases or even open lines of credit.
  • Clicking on a phishing email could result in sensitive information getting stolen. These emails often ask you to click on a link to prevent your services from getting interrupted or to claim a refund.
  • Some criminals claim to work for government programs. They will ask for your personal information under the guise of helping you sign up for a program that will reduce your utility bills.
  • If you click on a malicious email, you could infect your device and entire network with malware.
  • Giving physical access to your facility to someone who is posing as a utility worker could result in theft.

These schemes can have devastating consequences for your business. In fact, in 2020, people lost a collective $1.2 billion to impostor scams.

In particular, spoofed emails that look like they came from utility providers can be extremely harmful as well. Businesses lost a total of $1.8 billion in 2020 to business email compromise (BEC).

These schemes can take up your valuable time and cost you a lot. Plus, a compromised network can result in issues with productivity or a lack of trust from your customers.

Fortunately, there are some solutions to consider for keeping your business, your network and your customers’ data safe from these schemes. You can protect your bottom line with the right fraud prevention tools.Utility Fraud Infographic

What is the best way to protect yourself?

The methods you can implement to protect yourself from this type of fraud will also help you mitigate the risks linked to other schemes.

Review your best practices

Adopt a well-documented process to keep track of payables, including utility bills. Then if a utility company reaches out to ask for a payment or ask you to claim a refund, you will have a paper trail to refer to.

Additionally, employees should be aware that utility fraud exists. They should know not to share any sensitive information over the phone. When in doubt, it’s best to hang up and contact the utility company directly to see if there is an issue with the business account.

Lastly, a visitor log and a system to record planned visits from utility companies can protect you from scammers who impersonate utility workers.

Protect yourself from BEC

Criminals are getting more sophisticated. In fact, some of them are using AI-generated emails to create realistic spoofed messages from utility companies.

While there are clues that recipients can look for to identify spoofed emails, AI is your best line of defense. Indeed, this technology can look at multiple data points that human eyes can miss.

Protect your business identity

You can protect your business with an identity verification solution. This tool can look at hundreds of data points and verify whether an entity is who they claim to be. It’s a useful tool for spotting fake invoices and spoofed utility bills.

How Fraud.net can help with utility fraud

Fraud.net offers solutions to prevent utility fraud and protect your bottom line. Here are some of the tools we offer:

  • Email AI. With our email AI solution, recipients can see a risk score for each message they receive. This score will immediately let them know when something is off.
  • Identity verification. By looking at hundreds of data points, our identity verification solution can spot inconsistencies and let you know when someone is not who they claim to be.
  • Rules and workflows. We can help you review existing rules and workflows and advise you on how to create a well-documented process for handling invoices and utility bills.

Are you worried about falling victim to a utility fraud scheme? Find out how you can improve your fraud prevention efforts with our free email AI and a free fraud analysis.