N-VA wants to end invoice fraud with IBAN name checks

N-VA wants to end invoice fraud with IBAN name checks
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Flemish right-wing N-VA party wants to put an end to invoice fraud with IBAN name verification, meaning that each transfer should be checked to see whether the account number and the name match.

The proposal follows recent news about invoice fraud, in which many people lost a lot of money by sending it to the account of scammers, instead of to the person they thought they were sending it to.

This happens when fraudsters intercept an invoice and change the account number on it. In the past, invoices were physically stolen to change the account number, but now, fraudsters can hack into the mailbox and change the number.

The phenomenon has been around for years, but Federal Public Economy Service has seen a strong growth recently, as the authorities received some 369 reports for a total of €4.5 million last year, or 19% more than in 2019, reports VRT.

To combat this practice, Flemish MP for N-VA Michael Freilich prepared a bill that obliges the banks to introduce the IBAN name check: when you deposit money into an account, you get a message asking if the name and account number match.

“Today, there is absolutely no such check. Whether you enter the correct name of the beneficiary, or whether the payment is made to Bart De Wever or Mickey Mouse, it makes no difference at all,” he said. “The bank will always make the payment – regardless of the name you enter.”

“We are inundated with various forms of phishing. The problem with suspicious transfers is that the customers themselves transfer the money to an account,” said Freilich.

And if that leads to scammers, they will lose their money, as Belgian banks are not obligated to refund the lost money.

“The IBAN name check is not a silver bullet, but every little bit helps to put an end to online scams,” he added.

‘Don’t know how to do without’

The system of the IBAN name check would not be new, as the United Kingdom and the Netherlands have been using it for some time now, says Berendjan Beugel of Betaalvereniging Nederland, an umbrella organisation of Dutch companies – including banks – that offer payment services.

“With us, it was introduced in 2017 because we had a lot of problems with online scams,” he told VRT. “We did not need a law for that. The banks and payment companies thought it was important that we had such a system and introduced it themselves.”

In the meantime, all the major banks in the Netherlands, such as ABN AMRO, ING and Rabobank are using the IBAN name check, says Beugel.

According to him, it works extremely well as fraudulent transactions have fallen by 80% since the introduction of the system, and he “does not know how we could do without it.”

Beugel emphasised that the system is free for the customer and works very intuitively. If the account number does not match the name, you get a notification to check if you still want to make the transaction. “If you do, the money is transferred,” he said. “But you always get a notification when you enter a new account number.”

The Belgian banking federation Febelfin confirmed that someone’s account number and name are not linked, and that the IBAN number is the only thing that identifies someone.

“In itself, we are not against the system of IBAN name verification, but it is not enough to regulate it only in our country,” Isabelle Marchand of Febelfin said on Flemish radio, adding that European rules would be good.

Consumer federation Test-Achats, however, does not fully agree, stating that Belgium cannot always wait for Europe to regulate everything.

“We think the IBAN name check should come. The sooner we can stop online fraud, the better,” spokesperson Simon November told VRT, adding that he realises that the system is not a miraculous solution to all scams.

“But any fraud we can stop is a good thing, because the IBAN name check has already proven its worth in the Netherlands.”

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