Vendor Fraud Detection

My client almost wired $47,000 to scammers. One late-night text saved their business. "This invoice from our supplier looks a little off. Should I pay it?" The email looked perfect. Logo, formatting, even the right contact information.  But something felt wrong to my client, so they texted me at 11 PM. Good thing they did. It was a complete fake. Sophisticated phishing that would have emptied their operating account. This is happening everywhere right now. I'm seeing vendor-related scams hit my clients weekly.  The emails are getting so good that even I have to look twice. Here's what we've implemented to protect everyone: We never manually enter payment information anymore. If it's a new vendor or changed banking details, the vendor has to input their own payment info through our secure system. Both my team AND the client have to approve any new vendor payments. No exceptions. We verify every banking change with a phone call to the vendor's known number. Not the number in the email. Any invoice that feels "off" gets flagged immediately, even if we can't explain why. The scammers are targeting inventory bills because they're usually large amounts that won't seem suspicious for growing brands. One wire transfer to the wrong account, and your working capital is gone forever. Trust your gut. When something feels wrong, it usually is. Even at 11 PM. #cybersecurity #fraudprevention #business #scamalert #vendormanagement

BEC Invoice Fraud, also called Payment Redirection Fraud, Invoice Spoofing, or Man-in-the-Middle (MITM) Billing Attack, is a sophisticated scam where fraudsters impersonate vendors to redirect legitimate payments. How It Works: 1. Reconnaissance:Attackers research your company via LinkedIn, websites, or leaked data to identify suppliers and payment patterns. 2. Compromise:They hack or spoof a vendor’s email (e.g., changing payments@vendor.com to paym3nts@vend0r.com) using phishing, malware, or domain spoofing. 3. Interception:During ongoing invoice discussions, they insert fraudulent messages with new bank details, often mimicking real threads. 4. Urgency: Fake emails push rushed payments ("Pay today to avoid delays!") exploiting tight deadlines. 5. Diversion: Funds land in mule accounts (often overseas) and vanish within hours. Precautions: - Verify Changes: Call vendors using known numbers (not email signatures) to confirm bank changes. - 2FA & DMARC: Enforce multi-factor authentication and email authentication protocols (SPF/DKIM/DMARC). -Payment Controls: Require dual approval for new payees; flag IBAN/country mismatches. - Employee Training: Teach staff to spot subtle spoofing (e.g., Cyrillic "а" vs. Latin "a"). - Vendor Portals:*Use secure supplier portals for invoices, not email. In 2024, FBI reported $2.7B in BEC losses—80% from invoice fraud. One missed call can cost millions. Stay paranoid. #BEC #InvoiceFraud #CyberSecurity

5 Fraud Prevention Strategies Treasury Leaders Must Prioritize in 2026 Fraud is evolving faster than most control frameworks and Treasury sits right at the center of that risk. As more payments move to API rails, as ISO 20022 introduces richer data, and as attackers shift toward credential compromise and beneficiary manipulation, the controls that worked 5 years ago no longer hold. Here are 5 strategies Treasury and Finance leaders should advance in 2026 to strengthen protection without slowing down operations: 1. Modernize Payment Controls for API Treasury Flows Many organizations have upgraded to APIs for speed but haven’t updated their fraud controls. Treasury needs: • IP allow-listing • API key rotation • Transaction-level authentication • Real-time integrity checks API connectivity must be treated as a payment channel, not an IT feature. 2. Apply Zero-Trust Access Across All Treasury Systems The fastest-growing threat is credential compromise which targets TMS, ERP, and bank portals. Treasury must eliminate single points of failure through: • Role-based access • MFA/SSO • Quarterly access certification • Device/location-based restrictions Zero-Trust isn’t optional. It’s important. 3. Centralize Beneficiary & Vendor Master Governance Most fraud losses begin with beneficiary manipulation, not payment file tampering. Treasury teams should enforce: • Segregation of duties • Mandatory callbacks for changes • Bank-side name matching (where available) • Real-time alerts for edits If you secure the master data layer, you shut down the majority of payment fraud attempts. 4. Utilize ISO 20022 Data to Strengthen Detection ISO 20022 gives treasury structured, high-quality data that improves fraud analytics. Use cases include: • Purpose codes to identify abnormal payment types • UETR tracking to flag unusual routing patterns • Structured remittance fields to validate payment intent Better data = better detection and faster exception handling. 5. Use Intelligent Anomaly Detection Across All Payment Channels Volume, speed, and complexity make manual monitoring ineffective. Treasury needs anomaly detection that identifies: • Deviations from historical behavior • Unusual timing or amounts • Suspicious user activity These tools identify risks humans simply cannot catch early enough. Fraud evolves when controls are ineffective. Treasury teams that modernize payment governance, strengthen access, secure beneficiary data, and utilize ISO 20022 and AI-driven analytics will be the ones that stay ahead of emerging threats in 2026. Which fraud control is becoming a priority for your organization?

Bob just gave $70,000 to a complete stranger who provided zero value. Actually, it wasn’t just a stranger, it was a thief posing as a vendor. They sent an email saying, “Pay now, get a 5% discount.” Bob was busy, running a million miles an hour, and thought he’d snag a quick win for the bottom line. He sent the wire. By the time he realized it was a scam, the money was gone. Most contractors think cybercriminals are only targeting the big guys. They aren't. They’re targeting mid-sized construction shops because you move high-dollar amounts for materials every day, and your internal controls usually aren't as tight as a tech giant's. Unfortunately, Bob is screwed. You don't have to be. Unless you have the right coverage, you’re eating that loss. When you’re looking at your cyber or crime policy, look specifically for Social Engineering or Funds Transfer Fraud. You need to ensure it covers "Voluntary Parting." Most people think of "hacking" as someone breaking into a vault. In this case, the thief didn’t break in, they tricked you into opening the door and handing them the bag. But look, a policy is just a safety net. The goal is to never fall off the tightrope in the first place. If a vendor sends an email with new wire instructions, a "special discount," or a sudden sense of urgency, stop. Pick up the phone. Don’t call the number in the signature of that email, call the number you’ve had in your system for five years. Verification takes seven minutes. Replacing $70,000 of net profit takes a heckuva lot longer. Implement an SOP where no wire goes out without a voice on the other end of the line. Share this with your office manager today. It’s a lot cheaper than the alternative.

The recent collapse of Builder.ai is a stark reminder of the importance of thorough vendor due diligence—especially in the age of AI hype. Despite being backed by industry giants like Microsoft and SoftBank, Builder.ai’s “AI-powered” app development platform turned out to be 700 human engineers masquerading as bots, with no real proprietary AI behind the curtain. The fallout has been severe: financial fraud, a massive data breach exposing millions of client records, and a web of fake invoices that artificially inflated revenues by 300%. Even more alarming, internal audits revealed that 75% of their revenue came from traditional human services—not the AI innovation they promised. **Key takeaways for anyone selecting technology partners:** - Don’t be dazzled by big names or slick marketing—demand transparency and proof of capabilities. - Scrutinize technical claims. Ask for verifiable patents, real demos, and speak directly to the teams building the product. - Investigate company financials and client references, not just headline numbers. - Ensure your vendor has robust data security practices—Builder.ai’s breach exposed 3.1 million client records. In a market where 90% of AI startups reportedly have no proprietary models, and hype often outpaces reality, the cost of skipping due diligence can be catastrophic. Let’s use this moment as a call to raise the bar for vendor vetting—because trust should be earned, not assumed. #VendorVetting #Technology #Innovation #Startups #TrustButVerify

Third-Party Risk Isn’t Scary. Your Blind Spots Are. ☠️ "Your vendors are your biggest vulnerability. Stop treating them like paperwork." The nightmare fuel: 63% of breaches originate from third parties (Ponemon) 81% of companies can’t assess critical vendors in real-time (Gartner) The fix? Tiering + Continuous Monitoring = Unbreakable Defense (Steal this 4-step playbook) Step 1: RUTHLESS TIERING Tier 1 (Critical): → 20 vendors touching PII/payments/IP → Monthly automated audits + live threat intel feeds Tier 2 (High): → 50 vendors with network access → Quarterly audits + breach monitoring Tier 3 (Low): → All others → annual compliance certs + auto-expiring access "Stop boiling the ocean. Protect your crown jewels." Step 2: AUTOMATED VIGILANCE Deploy these sentinels: ✅ SOC 2 Tracker: Auto-flag expired/missing reports ✅ Breach Radar: Monitor vendor domains/Dark Web ✅ Financial Health Alerts: Track credit downgrades ✅ Access Recertifier: Auto-revoke unused logins Step 3: THE "RED LINE" RULE Terminate immediately if: → Critical findings unaddressed in 72h → Breach disclosure delayed > 24h → Subcontracting without approval Step 4: METRICS THAT BITE Track relentlessly: ▫️ % Critical Vendors Compliant (Target: 100%) ▫️ Mean Time to Risk Detection (Target: <48h) ▫️ $ Saved by Avoiding Fines (Prove ROI) The Result: → 92% faster risk detection → 70% fewer vendor questionnaires → $1.3M saved in incident-related fines 👇 What’s your biggest vendor risk gap? A) Inconsistent tiering B) Manual monitoring C) Slow termination ♻️ Repost to protect your ecosystem 🔔 Follow for more GRC warfare tactics #ThirdPartyRisk #VendorRiskManagement #CyberSecurity #GRC #RiskManagement #Compliance

I’ve talked a bit recently about what we at Routable are calling “Know Your Payee” (KYP)—basically, a system for ensuring that your vendors:   💯 are real 🥸 are who they say they are 👀 aren’t on any watchlists Something we know all too well at Routable: Fraudsters are getting VERY good at imitating legitimate payees. So it wasn’t surprising to read in a recent MIT report, “Battling next-gen financial fraud,” that imposter scams were the most common type of fraud in the US in 2023. The report notes that synthetic identity fraud is ❗️costing banks $6 billion ❗️ a year, with bad actors leveraging data breaches to create “Frankenstein IDs.” And technology is enabling all of this, because fraudsters can develop scams more cheaply and at a larger scale than ever. This is a terrifying prospect for business owners and AP teams—especially because imposter scams are the fastest-growing financial crime in the US. And the old ways of protecting your business are no match for today’s tech-enabled fraudsters. But AI and automation are here 💡 Our KYP process uses the latest technology to safeguard our customers through: 👉 TIN validation   👉 watchlist monitoring   👉 bank account validation   👉 vendor onboarding and tax compliance 👉 invoice fraud prevention Together, these steps ensure compliance and fight imposter scams. Check out the infographic below for more on why this matters, and find the full MIT Technology Review x Plaid report here: https://lnkd.in/gxwWCuD5