BPM Analytics

Utility frauds and scams

Frauds have existed as long as companies have been in business. But recent technological developments, digital transformation, and integration of automated computer solutions in infrastructure have resulted in new types of frauds cropping on a regular basis. Fraudsters are increasingly becoming creative and sophisticated in hacking detection systems and bypassing security codes and authentications.

Utility companies are no exception when it comes to fraudulent activities. The companies and their end users face new scams every day, with the severity and frequency aggravated by various factors, such as the pandemic. With utility companies losing revenue and end users losing money, it is critical to be aware and beware of utility frauds and scams.

What is utility fraud?

Utility fraud involves identity fraudsters using an individual’s personal information - such as phone number, name, email ID, or service address - to open an account to obtain utility services. The victims would be unaware that a fraudulent account has been opened with their information until they are alerted by the collection agency, which makes it hard to track such frauds.

Types of utility frauds

Although utility frauds against customers are more commonly known, utility scams affect utility companies as well. And, as these scams continue to evolve by becoming more sophisticated, it is increasingly difficult for utility companies and customers to identify and prevent fraud. The most commonly observed utility frauds include:

• Impersonating utility companies to defraud customers: This is the most common utility fraud that targets end users. During 2020–2021, there was a sharp rise in such frauds as people were unable to pay their utility bills during the pandemic. Fraudsters extort money from customers who are behind on their payments by threatening to disconnect utilities and scamming people out of hundreds of dollars at a time by selling useless energy accessories under false representation.
• Using false identity to avail utility services: This is also a part of an identity scam where fraudsters take out utility connections under false or stolen identities with no intentions of paying the bills. Here, utility companies are left with lost revenue as they cannot track the perpetrators.
• Stealing payment information and other sensitive data: Automated computer networks power the modern utility infrastructure, leaving them susceptible to attacks, fraud, and theft. Anything from a phishing email to a sophisticated cyberattack allows fraudsters to steal payment information, personal details, and other sensitive data. This leaves utility companies and end users vulnerable to crimes such as identity theft, financial fraud, and much more.

Utility fraud prevention

Fraudsters are getting creative and scams are becoming more sophisticated. As utility companies and end users face numerous scam attempts, it is imperative to be aware of and take necessary steps to prevent utility fraud. To protect end users, businesses can:

• Educate the customers and dedicate efforts to raising awareness regarding potential fraud attempts.
• Publicise official timings for contacting customers and advise them to disregard any communication outside of official working hours.
• Educate customers about the official process for disconnecting utilities in case of missed payments.
• Encourage customers to use official channels, such as the official website or customer care lines, to make enquires and pay utility bills. Also, highlight the accepted forms of payment to reduce the potential of fraud.
• Make customers aware of call spoofing and encourage them to report any suspected fraud to a dedicated customer service team.

For utility companies, they need to protect business by:

• Having a robust vetting process in place for signing up new customers
• Regularly audit, review, and improve security measures for utility infrastructure
• Training employees to recognise, manage, and resolve phishing attempts or cyberattacks
• Strengthening data security and privacy protocols to protect the company’s and customers’ sensitive information from potential cyberattacks

Globally, end users and businesses are losing billions to utility fraud, with more and more people falling victim to utility scams every year. Therefore, it is imperative that utility companies not only educate their customers against potential fraud but take necessary actions to prevent fraud at their end as well.

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How can Infosys BPM help?

Infosys BPM utility theft, leakage, and fraud management solutions help you tackle utility fraud and protect your business against scams. Infosys BPM services help you detect suspicious patterns, monitor and respond to alerts, undertake due diligence of existing processes, and continually improve controls against utility fraud. With offerings such as theft (or leakage) and fraud analytics, assessment and automation services, and theft (or leakage) and fraud operations, these solutions facilitate utility fraud prevention, better risk coverage, lower false positives, and predictive analysis of any emerging threats.