The New Face of Vendor Fraud Cases

by Ashley Poynter

Content Manager

The New Face of Vendor Fraud Cases

New vendor fraud cases are getting…scary. Gone are the days when a dodgy invoice or a phantom supplier was the height of deceptive creativity. Now, fraudsters have gone Hollywood, employing techniques that could put real film directors to shame.

If you feel like your job as a vendor manager puts you squarely in the middle of a spy thriller, you’re not that far off. In this thrilling saga of deception, we’ve witnessed the evolution of vendor fraud from simple sleight of hand to an elaborate digital magic show.

It’s not just about sending an invoice for non-existent goods anymore; fraudsters have stepped it up to create entire virtual realities. What is real, and what is (deep)fake? No one knows. By the way, how are you sleeping at night knowing that protecting your organization against vendor fraud is your responsibility?

Take a deep breath. Your story doesn’t need to end in doom and gloom. Yes, we’re going to cover some new vendor fraud cases that might make you uncomfortable (reader discretion is advised). But we’re also going to discuss some vendor onboarding and management best practices that can act as a first line of defense. We’ll walk you through how to don the armor of due diligence and wield the sword of technology to stop fraud in its tracks.

It may be treacherous, but we’ll give you the tools you need to keep the bad guys at bay. Buckle up!

Vendor Fraud Cases: A Historical Perspective

The Evolution of Vendor Fraud Cases: Deceit in the Digital Age

Navigating the Digital Deception: A How-To Guide

Vendor Onboarding: The First Line of Defense Against Fraud

Automating Vendor Onboarding and Management: A Modern Solution

Get Ready For Vendor Management Appreciation Day 2024

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Vendor Fraud Cases: A Historical Perspective

In simpler times, vendor fraud cases were more about the occasional exaggerated invoice or billing for subpar goods. Picture a world where vendor verification was as straightforward as a firm handshake and an earnest look in the eye.

Fast-forward to today’s commerce, where globalization and digital transformation have changed the game. Businesses work with customers and partners all over the world. This is great news for organizations that enjoy new opportunities for growth and innovation. But it also introduces complexity (and new vendor fraud cases) into the mix.

Businesses operate differently now that the digital age has arrived. We’ve moved from paper trails to digital footprints – and fraudsters have paid attention. Their traps are more sophisticated, and they’re no longer bound by the limits of the physical world.

Fraudsters can operate from thousands of miles away. Technology makes it simple to spoof a phone number or a professional website. Adobe Creative Suits makes it a cinch to forge documents or checks. In other words, it’s easier than ever to scam the pants off your organization.

Moreover, the implications for those who fall victim to vendor fraud has never been more severe. The impacts can be financially devastating. Sure, you can suffer direct losses from paying for non-existent goods or services. But don’t forget the longer, more insidious effects of being entangled with fraudsters. You know, the reputational stuff. Imagine years of goodwill and customer trust :: poof :: disappearing in the wind.

It’s all a stark reminder that you need robust vendor verification processes. Vendor fraud cases have expanded. Your comprehensive fraud prevention strategies have to expand, too. This requires heightened vigilance and a sophisticated approach to vendor management.

The Evolution of Vendor Fraud Cases: Deceit in the Digital Age

Remember the days of charming tricksters and the slightly embellished invoice? Forget them; they’re gone. The digital revolution means vendor fraud cases are more terrifying than ever. If you don’t have the right tools in place to stop it, it will stop you. Let’s look at how vendor fraud cases have changed over the years – and what to look out for now.

Phishing expeditions and fake websites

Phishing, the tried and true classic, has gotten a facelift. Scammers can craft entire websites mimicking legitimate vendors, complete with customer service chatbots. It’s like fishing with dynamite in the digital pond. All it takes is one well-crafted email asking for you to update vendor’s bank account info. Before you know it, you’ve sent millions of dollars to the wrong person.

Vendor impersonation fraud

Vendor impersonation fraud is not new, but the way it’s executed is always new. It’s not just about forging a signature anymore. Fraudsters are hijacking legitimate vendor email accounts and emailing customers asking for bank account information updates. Or they’re creating convincingly detailed replicas to the same end. Your vendor desk, which is up to its neck in other paperwork to file, push, and approve, does not have the bandwidth to tell the real from the fake. It’s a disaster waiting to happen (if it hasn’t already happened).

And the award for best (deepfake) film goes to…

Deepfakes are taking the vendor management world by storm. Don’t believe us? Check out this story of an employee who sent fraudsters $25 million after thinking he had just been on a zoom call (with video!) with their CFO.. And the US is a hotspot for booming deepfake fraud. If you thought discerning between email addresses (e.g., mary@yourvendor.com vs rnary@yourvendor.com) was tough, wait until you come across one of these.

In short, vendor fraud cases may have the same names, but the way they occur is constantly changing. Your vendor onboarding and management processes need to be bulletproof. Does your organization have what it takes?

Navigating the Digital Deception: A How-To Guide

Ok, so fraud has become untenable. What can you do about it? Let’s look at the best ways to combat different types of fraud and some best practices to keep you safe.

Phishing

Educate your team on the latest phishing tactics and remind them that if an email pushes for urgency in changing payment details, that is red flag number one. It probably belongs in the digital trash bin. Yes, they should be checking that the email looks legitimate. Yes, they should make sure the sender’s address and name match the information on record. No, they should not take every digital request at face value.

Implementing email filters and verification protocols can help, but they’re not a perfect solution. And if your organization has a culture of letting higher-ups break process, things could get tricky. If it’s not uncommon for your CEO to email you things like “Urgent: please send this payment through ASAP,” then you’re going to have a tough time discerning the real from the fake.

Vendor desk hack: Use this Document the Exceptions template to keep track of every time you’re asked to break process. Then show the offenders how often they are putting your organization at risk.

Vendor impersonation

Proactive doubt is an art form. Your vendor desk should question everything. That means regularly reviewing and verifying the details of your vendor relationships and encouraging a culture where it’s okay to ask, “Is this real?”

Vendor desk hack: Make sure you have a documented process for how to handle vendor onboarding and management, including vendor change requests. Try this template.

Deepfakes

Combating deepfakes requires a blend of technology and good old-fashioned skepticism. Encourage your team to verify unusual requests through multiple channels. If you have the budget, it doesn’t hurt to invest in deepfake detection technology (reminder: these are never perfect).

And see our note on company culture above. If your CEO, CFO or anyone higher up on the food chain than the AP specialist is known for sending “last minute” requests that fall outside of documented processes, you’re at an elevated risk.

Dodging fraud requires knowledge, skepticism, the right tools, and the right culture. More importantly, the fight against fraud starts at vendor onboarding.

Vendor Onboarding: The First Line of Defense Against Fraud

Given the rapid evolution of vendor fraud cases, you need a plan. Vendor onboarding should be your first line of defense against vendor fraud. Here’s how.

Document Your Onboarding and Management Strategy

If you don’t have a documented vendor onboarding strategy, now’s the time to start. Grab our template in the section above to get started. A clear, thorough strategy is like your fraud-fighting battle plan. It outlines who does what, when, and how, making it easier to spot when something’s amiss. This shouldn’t just be about ticking boxes; it’s about understanding the why behind each step. When everyone’s on the same page, it’s easier to see red flags.

Check your culture

Next, let’s talk culture – specifically the kind where higher-ups think processes are for “other people.” If your C-suite is bypassing checks because they can, you have a gaping vulnerability on your hands. It’s vital to ensure that everyone, from the mailroom to the boardroom, understands the importance of the onboarding process and follows it to the letter. After all, a chain is only as strong as its weakest link, and you don’t want that link to be your CEO’s penchant for shortcuts.

Compliance as a compass

Compliance isn’t just a hoop to jump through. In fact, if you have a compliance process (which you can document using this checklist), you have an extra line of defense. Sure, meeting regulatory requirements helps you avoid fines and penalties. But it also safeguards your organization from bad actors who aren’t playing by the (local, state, federal) rules.

Abandon “how we’ve always done it” thinking

Many organizations get stuck in a rut. They’ve done things a certain way for so long that it’s nearly impossible to see things any other way. Typically, this involves a ton of manual processes – and the resulting human error.

If your vendor onboarding process feels like an old, rickety bridge, it might be time to try something different. Stop patching holes with more manual processes. Introducing automation to some or all of your vendor onboarding and management processes can minimize risks and ensure consistency. It can also keep things accurate and efficient – and it helps fortify you against the latest and greatest vendor fraud cases.

This new way of doing things will inevitably free up your vendor desk to focus on creating value for the organization. That means redirecting efforts to payment optimization (virtual cards, anyone?) and driving greater efficiencies across the entire organization.

Automating Vendor Onboarding and Management: A Modern Solution

Unpopular opinion: vendor onboarding and management automation isn’t a luxury. Not when it comes to fraud. Imagine a world where the endless paperwork, the back-and-forth emails, and the monotony of data entry are all taken care of by your trusty automated systems.

Much to the dismay of fraudsters, automated tools don’t get tired, they don’t make typos, and they certainly don’t accidentally onboard a vendor who’s been on a sanctions list.

Nope. Automated platforms offer real-time updates from sanctions lists, automated alerts for expired documents, and a system that practically does the due diligence for you.

On top of that, an integrated, automated vendor onboarding platform can harmonize processes and eliminate siloes. It makes it easy for finance, procurement, and compliance teams to work smarter in unison, not harder apart.

Vendor fraud cases have reached the big leagues. Your vendor desk should be able to play at that level. Manual processes are a swing and a missed opportunity to elevate vendor onboarding and management. Not only will you be better equipped to fight fraud, but you’ll also be positioned to create value that benefits the entire organization.

Get Ready For Vendor Management Appreciation 2024

We’re not letting fraud get us down. Why? Because the Vendor Management Appreciation Day (VMAD) celebration continues in 2024! We’re celebrating vendor managers — an everything they do to help fight fraud.

We know vendor management is one of the most critical, under-recognized roles across industries. And we’re here to change that.

VMAD is a brand-new holiday geared toward unifying vendor management professionals and celebrating innovation in the field.

We’ve released gifts each month to help you supercharge your vendor management efforts. We’re also planning some awesome events so everyone can connect and celebrate the important, strategic role of vendor management.

Learn more here, and grab some free vendor management goodies.