Why do I keep getting fake invoices from vendors I don’t recognize

If you’re repeatedly receiving fake invoices from vendors you don’t recognize, your business may be targeted by a form of invoice fraud, a business email compromise (BEC) scam, or a vendor impersonation attack. Cybercriminals and fraudsters have become increasingly sophisticated in their methods, leveraging phishing, social engineering, and data breaches to trick organizations into processing fraudulent payments.

This article explores the potential reasons behind this issue, the techniques scammers use, and the preventive measures businesses should implement to safeguard their financial processes.

Common Causes of Fake Invoice Attacks

Phishing and Email Spoofing

Fake invoices are often distributed through phishing emails that impersonate legitimate vendors or service providers. Scammers use email spoofing to manipulate the sender address, making it appear as though the email comes from a trusted source.

• Attackers may use domain typos (e.g., “vend0r.com” instead of “vendor.com”) to create deceptive emails.

• They include fake invoices as attachments or malicious links that redirect recipients to credential-harvesting sites.

• Employees who fail to verify sender authenticity may unknowingly process these fraudulent invoices.

Data Breaches and Dark Web Exposure

Your business information might be circulating on the dark web due to a previous data breach, making you an easy target for scammers.

• Hackers often steal company email lists, financial records, and vendor details, selling them on illicit forums.

• Fraudsters use these records to craft highly personalized invoice scams, making them appear legitimate.

• If your company has been compromised, scammers may use leaked purchase order (PO) data to make fraudulent invoices indistinguishable from real ones.

Social Engineering and Vendor Impersonation

Fraudsters rely on social engineering tactics to manipulate employees into paying fake invoices.

• Attackers may research your company’s vendor relationships through publicly available data (such as LinkedIn or business directories).

• They pose as existing vendors, requesting payment updates or submitting invoices with slight modifications.

• Employees, unaware of these tactics, might approve payments without verifying the legitimacy of the request.

Compromised Business Accounts and Internal Breaches

If a vendor or one of your business accounts has been hacked, scammers can send fake invoices from legitimate email addresses.

• Cybercriminals may gain access to supplier accounts through credential stuffing or phishing attacks.

• Once inside, they alter legitimate invoices by changing banking details and then resend them for processing.

• These attacks are particularly dangerous as they exploit trust-based relationships between businesses and suppliers.

Fake Vendor Registrations and Invoice Injection

Many businesses have vulnerabilities in their vendor registration processes, allowing fraudsters to register as suppliers and submit fraudulent invoices.

• Attackers take advantage of weak procurement controls to create fake supplier profiles.

• Once registered, they submit invoices that mimic real transactions.

• If the finance team does not have strict verification protocols, these invoices may be processed and paid.

How to Prevent and Mitigate Fake Invoice Fraud

1. Implement Rigorous Vendor Verification Procedures

Organizations must establish strict onboarding processes for vendors to prevent fraudulent registrations.

• Require detailed company registration information, including tax IDs, business licenses, and official banking details.

• Verify vendor legitimacy through phone calls, website validation, and industry databases.

• Regularly audit and remove inactive or suspicious vendors from your financial system.

2. Strengthen Email Security and Authentication Controls

Since most invoice fraud originates from email scams, businesses should implement robust email security measures.

• Use DMARC, DKIM, and SPF authentication protocols to prevent email spoofing.

• Deploy AI-powered email filtering systems to detect phishing attempts.

• Train employees on how to recognize phishing emails and report suspicious invoices.

3. Establish Multi-Level Invoice Approval Workflows

Invoice fraud often succeeds because of weak financial approval mechanisms.

• Require dual or multi-person approval for high-value transactions.

• Cross-check every invoice with existing purchase orders before processing payments.

• Implement spending thresholds that trigger manual reviews before payments are made.

4. Monitor Bank Account and Payment Detail Changes

Attackers frequently manipulate banking details in invoices to divert funds.

• Require verbal confirmation from vendors before changing payment details.

• Compare historical banking information with new requests to identify inconsistencies.

• Use automated validation tools to verify banking details before executing transactions.

5. Conduct Regular Security Audits and Employee Training

Internal training and audits are critical for maintaining a fraud-resistant financial system.

• Conduct quarterly audits to identify and remediate vulnerabilities in invoice processing workflows.

• Train employees on common fraud tactics, including social engineering, phishing, and impersonation scams.

• Encourage a culture of verification, where employees feel empowered to question suspicious invoices.

6. Leverage AI and Machine Learning for Fraud Detection

Modern fraud detection tools use artificial intelligence to identify anomalies in financial transactions.

• Deploy AI-driven fraud detection systems that flag invoices with unusual patterns.

• Use predictive analytics to detect invoice manipulation attempts.

• Implement automated alerts for sudden changes in payment behavior or new vendor registrations.

What to Do If You Receive a Fake Invoice

If you suspect that an invoice is fraudulent, take immediate action to mitigate the risk:

1. Do Not Engage with the Sender – Avoid responding or clicking on any links.

2. Report the Email as Phishing – Flag it in your email system to help filter out similar threats in the future.

3. Verify the Invoice with the Alleged Vendor – Call the vendor using the official phone number from their website, not the contact details listed in the email.

4. Check Past Transactions – Determine whether similar fraudulent invoices have been processed in the past.

5. Notify Your IT and Security Team – They can investigate if your company’s email system has been compromised.

6. Alert Your Financial Institution – If funds were transferred, contact your bank immediately to attempt a recall.

7. File a Fraud Report – Report the scam to regulatory authorities such as the Federal Trade Commission (FTC) or your country’s fraud reporting agency.

Fake invoice scams are an evolving threat that can lead to substantial financial losses and reputational damage. Cybercriminals are becoming more sophisticated in their methods, leveraging phishing, social engineering, and compromised accounts to deceive businesses.

By implementing stringent security measures, verifying vendor information, and training employees on fraud prevention, organizations can significantly reduce the risk of falling victim to invoice fraud. Proactive prevention is the best defense against these scams.

Would you like assistance in auditing your vendor records or analyzing a suspicious invoice for fraud indicators?