Water authority hires private firm to make payments in response to vendor scam

The Municipal Authority of Westmoreland County has hired a Georgia-based company to pay its vendors.

Officials said the deal, which they described as a trial run that could net the authority up to $180,000 annually in additional revenue through commissions, is in response to a fraud scheme that resulted in the theft of $826,000 in June.

The contract with Repay of Atlanta, which says it does similar work for 4,500 clients throughout the U.S., calls for the company to process all invoices and make payments on the authority’s behalf to vendors and contractors who do business with the authority. The company pays vendors with a “virtual credit card” and collects a 1% rebate as payment for its services.

The authority will receive half of that rebate generated through its own transactions.

“Our recent brush with a vendor impersonation scheme made us well aware of the risks of fraudulent actors, who are always working in the background. With this contract, we will shed much of that risk and also gain a stream of revenue from what were previously just payments, money heading out of the coffers of MAWC,” said authority business manager Brian Hohman.

The authority was targeted in June by scammers posing as a vendor awaiting payment for work in the agency’s $25 million project to expand its Indian Creek water treatment plant near Connellsville. Using an email address similar to the authority’s contracted vendors, the scammers sent financial staff bogus billing information as to where funds should be paid.

The authority’s New York bank investigated the theft and was able to track the money to about 10 other financial institutions and recovered most of the funds, nearly $729,000. Insurance repaid the remaining $97,000 that wasn’t initially found.