In a billing scheme, the fraudster submits a false invoice or alters a valid invoice
that induces the buyer to make a payment that should not be made. Billing schemes
are very common and very costly. The three most prevalent types of billing schemes
are those that involve shell companies, those that rely upon the alteration or double
payment of a vendor’s invoice, and those that entail making personal purchases with
- A shell or dummy company is a fictitious entity, generally created by an employee,
which has been established exclusively to perpetrate a fraud. A shell company often
consists of little more than a post office box and a bank account. The employee
submits what appears to be legitimate invoices from the dummy company for services
or goods that would be of the type normally purchased. When these invoices are paid,
the fraudster, unbeknownst to the buyer, keeps the payment.
- Fraudulent disbursements can be effected by using what are or were legitimate vendor
invoices. The amount of the original invoice is increased or the original invoice
is paid twice. Alternatively, a payment can be intentionally sent to the wrong vendor.
When the vendor returns the overpayment, the employee intercepts it and keeps the
- Employees sometimes make personal purchases using company funds. The fraudulent
purchases are often made using the organization’s credit card, so that payment appears
to be nothing more than the proper settlement of organizational debt.
Billing schemes follow the typical form of creating invoices
for ficitious goods or services, inflated invoices, or invoices for personal
expenses. Most billing schemes charge for services, rather than goods, because
it is easier to conceal services that are not performed than goods that are not