How to Spot a Fake Electric Bill

Fake documents are central to most—if not all—financial crimes. 

Each year, lenders report losing money to fraudsters and merchants who run elaborate and finely honed utility scams, making them difficult to catch. 

Document fraud trends show that 10% of all financial application documents submitted via online channels have been manipulated, especially utility bills.

Electric bills, in particular, are a favorite of the scammers, as they take advantage of lenders who rely on manual processes to approve loans and insurance. Without the right tools and information, it's easy to fall victim and send money to phony accounts.

In this guide, you'll learn why fraudsters use fake electric bills, how false documents affect lenders, and how you can protect yourself from being swindled.

Why might someone need or create fake electric bills?

Fake utility bill scams are common, especially during the COVID-19 pandemic. However, fraudsters are now increasingly targeting banks and other lenders using falsified electric bills to request money transfers in their victims' names.

Criminals know how the credit application process works, and they can take advantage of banks that still use manual document reviewing methods before approving loans or insurance. 

They typically use the internet (email messages, phone, and online portals) to target lenders. They use cleverly designed messages and attach fake electric bills from common energy providers. 

Where do they get the fake documents? Some fraudsters alter the bills themselves by altering customer billing details or signatures. Others use fake document generator websites or buy from hackers or the dark web.

Scammers knowingly commit electric bill fraud, but risk their financial well-being and freedom to perpetrate the crimes. Their primary aim: to steal a victim's identity and create fake documents in their names to defraud the bank and its customers.

Why do banks and lenders ask for electric bills? How do they use them?

When reviewing a customer's loan or insurance application, you need to consider:

• The borrower's ability to repay the loan based on their income, recent tax returns, pay stubs, or monthly bank statements
• Credit score, payment history, outstanding debts, and duration of credit history
• Debt-to-income ratio (DTI) to determine the borrower's ability to pay new or old debt
• Collateral/valuable assets like real estate, cash or investment accounts, and precious metals that you can repossess in case the borrower defaults on the loan

Each applicant has a unique financial situation. But they must pre-qualify for the loan by meeting certain non-negotiable benchmarks. This way, the borrower can only apply for a loan that fits their specific financial situation. 

Typically, the borrower or applicant should provide several documents to confirm their identity, employment, and residence. 

The specific requirements may vary between different lenders. But ‌you should ask for the following key details during the insurance or personal loan application process: 

• Basic personal information
• Amount the applicant wants to borrow
• Purpose of the loan
• Applicant's employer and income verification (pay stubs, W-2s or 1099s, income tax returns, bank statements, employer's contact details)
• Proof of identity (birth certificate, citizenship certificate, driver's license, passport, military ID, or other state-issued ID)
• Proof of address (lease or rental agreement, rental or auto insurance that lists the address, voter registration card, proof of home, or a recent utility bill)

A scammer might ‌provide most (if not all) of these documents, but not everything is as genuine as it seems. While reviewing the loan or insurance application, you might receive an authentic-looking email message with a fake electric bill. And then accept it immediately, especially if you're reviewing manually.

Knowing what to look for in a phony electric bill can save you and your customers from financial loss, as well as protect your organization from fraud and reputational damage.

How fake electric bills can negatively impact a bank or lender

PwC's Global Economic Crime and Fraud Survey 2022 found that 46% of organizations experienced economic crimes, such as fraud and corruption, in the last 24 months. 

From the survey, common external perpetrators whose activity rose substantially in the last two years were hackers (31%) and organized crime rings (28%). 

These criminals are becoming more professional and specialized in their craft. And, they're collaborating to increase the volume and sophistication of their fraudulent activities against corporate institutions. 

LexisNexis, a global provider of legal, regulatory, and business information and analytics, reports that lending and financial services firms incur an average cost of $5.34 for every $1 of fraud. Financial services and lending firms experience fraud losses across the customer journey, with distribution of funds being the most susceptible stage.

Identity verification also represents a larger share of fraud losses. Criminals breach digital identity data using contact phone numbers or email addresses in fake electric bills linked to synthetic identities for more account takeovers.

With rapid changes in the digital transaction channels' landscape, fraudsters relentlessly seek new vulnerabilities to exploit. Banks and lending firms face new threats, including some they may not readily detect with their current fraud and risk mitigation strategies or processes. 

Fraud goes undetected until further down the line, mainly when lenders use manual checks. Even if you hire the best document experts, it's impossible to meet 100% accuracy using the human eye. This will cost your firm more in legal fees and recouping funds from criminals. 

For example, Crédito Real, a Mexican financing company, spent hundreds of hours weekly reviewing and verifying application documents. This created friction and inefficiencies for the lending firm, since their analysts had to check each application for:

• Consistency
• ID accuracy
• Addresses
• Income
• Tax declarations

Your customers also expect secure, safe, and convenient access to their funds, meaning your security measures can't be too taxing. Any friction or fraud can cause negative customer experiences that tarnish your firm's brand.

With the recent surge in fraud cases, many lenders are improving their prevention methods to keep pace with risk mitigation. 

Financial institutions can no longer react to fraud after it happens; they need to be proactive or risk significant financial losses and reputational damage.  

How to spot a fake electric bill

As a lender, you can determine whether an electric bill is genuine or fraudulent. You can start by understanding the document's purpose and verifying its validity before accepting and approving the application to determine its authenticity. 

Typically, fraudsters create fake electric bills through:

• Freehand simulation: using copies of original electric bills to copy or forge the victim's handwriting, signature, or design
• Tracing: using carbon tracing or transmitted light to reproduce a signature, handwritten text, or design
• Electronic manipulation: copying information or a signature using photo editors and pasting it into a fraudulent electric bill

While it's impossible to detect these anomalies with the naked eye or high-powered magnification, you can still verify the authenticity of an electric bill, even if it's fake.

Some things you can look for include: 

• Data errors such as misspelled names or wrong postal or email address
• Altered or missing figures
• Altered images or text 
• Unusual formatting and design
• Mismatched addresses
• Inconsistent information from what's in the official database

Smart technologies like Inscribe's AI-powered fraud detection tool can find alterations and inconsistencies in fonts, data, design, and format in fake documents. 

When Credito Real adopted Inscribe's automated technology, it achieved: 

• 10x faster document reviews
• $100,000 worth of savings each month
• Faster fraud detection turnaround from hundreds of hours a week to seconds

Prevent fraud when verifying the validity of an electric bill

Fraudsters aren't amateurs. They're good at their craft because they do it every day.

Combatting external fraudsters is a complex challenge because they're immune to internal fraud prevention tools like investigations, codes of conduct, or training.

Inscribe can help you make fact-based judgments about the validity of any document—even fake electric bills.

Talk to one of our experts and find out how Inscribe can help future-proof your fraud detection and prevention against today's sophisticated criminals.