Vendor payment fraud is on the rise, with 96% of US companies targeted at least once in 2023. The rise of AI tools like ChatGPT has made it easier for fraudsters to create convincing phishing – whaling, spear phishing, etc – schemes across various platforms.
As cybersecurity and fraud become increasingly intertwined, detection grows more challenging. The impact of vendor fraud can have cascading effects: financial losses, damaged reputation, severed partner ties…
To combat this escalating risk, CFOs must prioritize cybersecurity and fraud prevention investments to protect their businesses and assets effectively.
Vendor fraud comes in various forms, each exploiting different vulnerabilities in business processes. Read on to discover the five common types:
Detecting vendor fraud requires a multifaceted approach combining vigilance and technology. Key strategies include:
Automated systems like Trustpair flag unusual patterns while maintaining an up-to-date vendor database. Training employees to recognize phishing attempts and using secure communication channels for vendor interactions complete a comprehensive fraud detection framework.
Our automated account validation system is based on the most comprehensive network of bank account databases on the market and checks:
A contextualized assessment is delivered for each vendor control.
Trustpair offers 360° protection against payment fraud risks by guaranteeing 100% reliability of vendor data throughout the procure-to-pay process. We ensure that accounts are reliable by leveraging the most effective combination of banking data, smart algorithms, and human expertise.
The ultimate solution to avoid vendor fraud is implementing fraud prevention software to confidently validate vendor bank accounts throughout the payment chain. Trustpair:
Our software automates vendor controls, reducing time-consuming and manual processes, prone to human errors and fraud. Your teams will gain time and peace of mind.
Confidently validate vendor bank accounts globally and validate their legitimacy across 200 countries thanks to the largest banking data sources network.
Experience Seamless Security in Action. Request Your Demo Today !
Uncovering vendor fraud schemes requires a keen eye and strategic approach.
False supplier fraud, also known as fake vendor fraud, is a deceptive scheme where fraudsters create fictitious companies to exploit legitimate businesses.
In this type of fraud, criminals pose as genuine suppliers, often using sophisticated tactics to appear credible. They may create fake websites, use stolen corporate identities, or even set up shell companies.
The fraudsters then submit invoices for goods or services that were never provided, aiming to trick organizations into making payments.
This fraud can be particularly dangerous as it often involves detailed research into a target company’s procurement processes and key personnel.
False supplier fraud may also be perpetrated by insiders with access to company information, making it harder to detect. It’s a growing risk in the digital age, where verifying supplier authenticity can be challenging without robust verification systems in place.
A classic example of procurement fraud is the “phantom vendor” scheme.
In this scenario, an employee within the organization creates a fictitious supplier in the company’s vendor database.
This fake vendor is often set up with bank account details controlled by the fraudulent employee or an accomplice. The employee then generates purchase orders and approves invoices for goods or services that are never actually delivered.
They might create convincing but false documentation to support these transactions, such as delivery receipts, invoices, or service reports. The company unknowingly pays these fraudulent invoices, with the funds going directly to the perpetrator.
This type of fraud can go undetected for long periods, especially in large organizations with numerous vendors and transactions.
It exploits weaknesses in internal controls, particularly in companies where the same individual can create vendors, approve purchases, and process payments without adequate oversight or segregation of duties.
"Trustpair gives us more reliability and peace of mind. The financial director is more serene when it comes to approving the transfer order."
"With Trustpair’s verification methodology, it's no longer just a consistency check but an exact confirmation of the validity of the third party: there is no longer any risk."
"With Trustpair, we are able to automatically and quickly monitor our third parties and ensure the security of that very data over the long term."
“I would definitely recommend Trustpair to finance departments. It makes adding and modifying beneficiaries more reliable, without resorting to manual processes that are cumbersome, time-consuming and fallible.”
“The control process is simplified with the Trustpair solution, the Finance Department is reassured and, above all, it no longer needs to waste time performing manual checks to verify a supplier's bank details.”
"Trustpair adapts very well to the specifics of our market and our way of working. Several features are developed as we work together. That's a real plus."
"Trustpair has become more than a reflex; it has become an obligation. The team no longer validates an IBAN unless Trustpair has confirmed it to us."
Thanks to Trustpair, we’ve made a significant shift in our security processes and filled the gaps we needed to fill. Trustpair has proved to be a committed and trustful partner and we’ve appreciated the support and transparency.
We’ve gone from manual and time-consuming fraud controls to automated bank account validation done directly in SAP. The workload has been drastically reduced and payment security is now guaranteed.
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