In a fake vendor scam, fraudsters will pretend to be one of your business’s suppliers so that you will pay them before noticing something is wrong. Once you pay them, they can also gain access to sensitive information. There are a few common methods they may use to carry out this scam, such as sending you fake invoices or hacking the email of your real vendors.
Common Types of Fake Vendor Scams
- Fake Invoices: Scammers may send your business a fake invoice using a shell company or by spoofing the name of your real supplier. These invoices are difficult to distinguish from the real thing, which convinces you to pay them. Make sure to verify your invoices before paying them, even if they look legitimate.
- Fake Deliveries: Fraudsters can send a delivery to your business that you didn’t order, then demand you pay for it. They rely on intimidation and stress to pressure you into paying, but it’s important that you double-check every delivery you receive. Don’t pay for anything you didn’t order, even if the company is pushing you.
- Email Compromise: Sometimes scammers hack a real vendor’s email account. If an email seems unusual or unexpected, verify before responding.
Warning Signs
Vendor fraud can be hard to spot, but there are a few red flags to look out for.
- Urgency: Scammers often pressure you to pay quickly. Take the time to verify the request and don’t be rushed.
- Unusual Payment Methods: Be cautious if a vendor asks for cryptocurrency, gift cards, or wire transfers. Ask yourself if this aligns with how they normally operate.
- Suspicious Requests: Avoid clicking links or sharing sensitive information from unexpected emails. These could be attempts to steal data or install malware.
How to Prevent Fake Vendor Scams
You can train yourself and your employees about how to prevent fraud. To protect yourself from fake vendor scams, it’s important to stay educated and consistently verify your information.
Educate Your Team: Keep yourself and your employees informed about common scams and safe practices.
Verify Vendors: Research new companies online before paying or sharing sensitive information. Look for complaints or a lack of presence—these could indicate a shell company.
If you are a victim of fraud, report it to your bank and to the FTC.
Central Bank offers resources to help you prevent fraud. Download our Business Security Toolkit today!
