What's vendor fraud?

Vendor fraud happens when a fraudster steals from a company for personal gain. They often manipulate a company's accounts payable team to make improper payments to fake vendors. This type of fraud may be committed by an internal employee or by an outside vendor with insider support. Often, small-to-midsize businesses are at greater risk and often targeted since they're less likely to have strict internal controls.

How does vendor fraud happen?

The fraudster sends an email from an account which may closely resemble the vendor's actual contact.

The fraudster sends a fax designed to look like the vendor's communications.

The fraudster calls an individual in accounts payable with the request to change a vendor's address or banking details. They follow up with an email or fax. 

Warning signs of vendor fraud

  • The vendor uses a PO box mailing address
  • Payment requests have no supported documentation
  • You've received duplicate invoices or payment requests on the same date or payment cycle
  • You've received an invoice or payment request that's outside of the normal billing cycle
  • Invoices are in whole dollar amounts, have no taxes, or include vague or unnecessary services
  • There are drastic changes in prices, services or products provided by a vendor than what's been agreed

Stay safe with our tips

  • Call your vendor at a known number to confirm any payment requests or changes received by email
  • Educate employees about the latest fraud schemes to help provide awareness on vendor fraud. Have safeguards in place to protect your company.
  • Search for signs of a potential fraudulent email, which can include grammar and spelling errors, design inconsistencies, suspicious attachments, unusual requests and a sense of urgency
  • Establish official contact methods for your vendor to ensure you're staying safe, such as using specific emails, fax and phone numbers
  • Make sure payment details, such as addresses and banking information, are up to date by contacting vendors on a regular basis
  • Verify the legitimacy of the vendor by doing your own research and ensuring it's an actual business

Notice anything suspicious? Let us know

Explore more about vendor fraud

Canadian Anti-Fraud Centre Opens in a new window.

Report fraud when it happens and track the latest data on fraud happening in Canada. 

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