This article takes its essence from the webinar we conducted with Jean Claude Marie, a specialist in the field of factoring and former sales manager of URICA..
In order to better understand the issues in this article, it is important to redefine factoring.
Factoring is a technique for financing and collecting receivables, allowing companies to obtain advance financing and thus subcontract the management of their invoice to a specialized credit organization.
This allows companies, in particular, not to have cash flow delays or to remain with unpaid invoices for too long, which could be blocking in the course of their activities.
URICA feedback
What is URICA?
URICA is a former factoring company. Based in London, URICA's mission was to proceed with the payment of invoices from various accounts based in France and England.
Created in 2014 in England, URICA set up in France in 2016 but was forced to cease its activities in France in the summer of 2018 due to a case of excessive fraud. While URICA was considered a Fintech, it was nonetheless solid in the market notably thanks to its partnership with Euler Hermes, now Allianz Trade.
What fraud took place and what is the related damage?
The fraud perpetrated against the factoring company was carried out by an entrepreneur in the agricultural sector through a company buying and selling inputs to farmers. His business is conducted through three companies, all of which specialize in agricultural work.
The fraud was carried out using false invoices.
First, the invoices sent to URICA were real, in order to reassure the factoring company. Some of the invoices were honored, but others were not, resulting in a real loss of earnings for the factoring company. The fraud was well organized because in addition to the false invoices, the fraudster had established, with his chartered accountant, a double accounting system in order to justify and make up the supporting documents.
More than 300 false invoices were issued, including 172 for URICA. The fraud generated is more than 9 million euros. Another actor than URICA was involved in this fraud: Eurofactor, the factoring branch of Crédit Agricole.
The fraud was therefore global and the invoices were worth several hundred thousand euros. The damage caused by the fraud was all the more important as it led to the bankruptcy of URICA. Indeed, the company could not recover from this fraud and thus had to close its French subsidiary.
“Everything started normally, the debts were paid. Little by little the outstanding amount rose and we realized that there was a problem because they were the ones paying us the debts. When the invoice was supposed to be 50,000 euros, they were charging us 150 or 200,000 euros.”
Jean-Claude MARIE, specialist in the field of factoring and former commercial director of URICA
Verdict of the legal proceedings:
The manager was sentenced to 2 years in prison and a fine. The certified public accountant was banned from practicing.
After studying the URICA case in depth, we will move on more quickly to two types of fraud: the Champagne Bricout fraud and the Smart Tréso fraud.
What about other frauds?
The Champagne Bricout fraud also involved the head of the company. A system of false invoices had been carried out in order to avoid the loss of the estate and the castle. The employees were forced to issue false invoices by their employer. This procedure generated numerous complaints, forcing the public prosecutor to open an investigation.
The Champagne Bricout fraud went beyond the French borders given the link with a Luxembourg company and also with the Holding company that bought it in the United States. The document fraud resulted in numerous losses, also for the 90 employees of Champagne Bricout. We will dedicate an entire article to this complex fraud, which had many repercussions.
The Smart Treso fraud is due to a securitization financing.
Securitization is the transfer of financial assets such as receivables to investors by transforming them, through a company into financial securities. In the case of Smart Treso, it involved converting old public contracts into new ones in order to obtain financing. False documents were created to justify this.
The factoring sector has repeatedly demonstrated its vulnerability to document fraud. It is therefore essential for factoring companies to find a way to prevent this fraud.
How to protect yourself against fraud?
There are many ways to protect yourself against these types of fraud. It is essential to use these different means to ensure as little fraud as possible.
Train your teams in fraud prevention.
Today, the most important means remains training and the transmission of good practices. Indeed, before being able to fight against fraud, it is essential to know and understand it.
Regarding training, many players today offer training courses depending on the sector of activity. In the insurance field, ALFAis the main training actor or the DFCG in the banking / factoring field.
Training is generally completed by the transmission of good practices. Indeed, it is necessary to offer practical training, beyond the theoretical, in order to help the implementation on the field afterwards.
Conducting surveys to fight fraud
The second way is to conduct surveys. In this specific case, it’s a matter of deploying a service within the company, with the mission of carrying out surveys. This service can be supported by software in order to focus only on tasks with high added value for the company's employees.
KYC (Know Your Customer) companies
KYC companies make it possible to determine whether a user exist s or not. Indeed, their mission is to find out if the customer exists on social networks, if he has a bank account or if he exists in the “yellow pages” etc...
The Finovox solution
Finovox is a solution for detecting forged documents. Our solution allows you to analyze in less than 5 seconds all your documents and then investigate them: 3D zoning, version comparison, analysis of the document structure, font modification etc. Finovox solution is your best asset to fight against document fraud within your company!
Fin’Equipe’s advice:
It’s essential to combine several solutions in order to effectively fight against document fraud. Urica's case is not a special one. Indeed, if we have studied it in depth, it’s far from being isolated. Fraud represents more than 42 billion losses per year, a significant amount that we must take into account in its entirety.
Would you like to watch the webinar with Jean-Claude Marie?
EN 
FR 
ES 
IT