Imagine your business receives an invoice from a “vendor” with updated wiring instructions. The email looks legitimate and matches your previous communication with them. You send the payment, but later discover the funds went to a scammer. This is an example of AI driven invoice and payment fraud, and it’s a common scam happening to businesses.
What Is AI-Driven Invoice & Payment Fraud?
In an AI-driven invoice and payment scam, fraudsters use AI to create highly convincing invoices, emails or payment requests. These scams are like Business Email Compromise, but more advanced, since AI can make a near perfect imitation. Fraudsters will impersonate a number of people close to your business, such as:
- Vendors
- Employees, especially those in finance departments or accounts payable
- Executives, to send you fake CEO or CFO requests for financial information
How the Scam Works
To carry out this scam, a fraudster will research your business to get the information they need to impersonate you, such as your vendors, employees and payment cycles. Next, they’ll use AI to generate realistic emails or invoices. The scammer will send this email, which may look like an urgent or routine-looking payment request. Then, the payment is redirected to a fraudulent account. Common tactics the scammer might use include:
- Requesting “updated banking details” from a vendor
- Sending a fake invoice that matches your usual formatting
- Sending an urgent executive request to pay something ASAP
Why It’s More Dangerous Now
AI keeps getting more advanced, which makes these scams convincing. AI can mimic writing style and tone, generate realistic invoices and documents, and personalize the scam to you. Because of this, there are fewer obvious red flags, such as typos or suspicious language. Additionally, this scam targets businesses of all sizes, not just large corporations.
Red Flags to Watch For
Even though these scams can be hard to spot, there are still some warning signs to look out for.
- Sudden changes in payment instructions
- Requests to bypass normal approval processes
- Urgent or last-minute payment demands
- Slight changes in email addresses or domains
- Invoices that look correct but don’t match internal records
How to Protect Your Business
Staying educated on fraud is your best line of defense. Additionally, consider implementing these steps to help protect your business from AI fraud.
Internal Controls
- Require dual approval for payments
- Designate invoice approval and payment release as separate duties
- Set payment thresholds requiring additional verification
Verification Processes
- Always confirm payment changes via a known contact method, not through the email request
- Call vendors using saved contact information
Employee Training
- Train staff to recognize AI-enhanced scams
- Emphasize slowing down and verifying requests
Technology & Tools
- Use fraud detection tools and alerts
- Enable account alerts for payment changes
- Consider Positive Pay or ACH filters
What To Do If You Suspect Fraud
If you suspect fraud, pause the payment immediately or attempt to stop the transaction. Contact your bank right away, and report the incident internally. Notify impacted vendors and partners, and don’t forget to document everything.
Central Bank offers resources to help you prevent fraud. Download our Business Security Toolkit today!
