Invoice Frauds and Fake Vendor Scams: What Finance Teams Need to Know

“A single email. A minor bank detail change. $500,000 gone.”

Wondering if this is just a hypothetical scare tactic? No, it is not. It is a real scenario that is being faced by finance teams globally. According to reports by the FBI’s Internet Crime Complaint Center (IC3), the losses made by Business Email Compromise (BEC) have exceeded $2.9 billion in 2023, and invoice fraud is among the top methods.

Invoice fraud, which is often executed through fake vendor scams, easily bypasses the technical defenses many organizations use. This is exactly what makes it quite dangerous. It doesn’t involve any malware or malicious links. All it needs is just a convincing email that blends seamlessly into your Accounts Payable (AP) workflow.

Defining Invoice Fraud & Fake Vendor Scams

A type of Business Email Compromise or BEC method in which the attackers aim to trick organizations into paying fraudulent invoices or changing legitimate vendor banking details is referred to as invoice fraud. Also, it is sometimes called vendor impersonation fraud. 

Let’s have a look at the most typical traits:

• Emails are being sent from spoofed or compromised vendor accounts. They often request updated bank info. In such a scenario, the messages may seem to come from a trusted partner’s real email address or a domain that looks almost identical to it. Also, to make the messages look more genuine, the attackers often include precise references to ongoing projects or past transactions.
• Impersonation of an attacker as an internal finance staff member is quite common. Here, the criminals may appear to you as a CFO or an Accounts manager, who has the job of instructing subordinates to process a payment immediately. The messages framed by the attackers are time-sensitive, and they may even appear very genuine to the finance staff.
• The attackers make sure that the PDFs used in the invoice frauds have the correct logos, formatting, and line items. Thus, the fraudulent invoices replicate legitimate templates. Also, they include purchase order numbers and vendor branding, which the attacker collects from prior communications. So, at first glance, they seem to be very authentic. 
• The attacker cites due dates, penalties, or quarter-end pressures to create a sense of urgency. As they link payment delays to operational disruption or financial penalties, it creates pressure on the finance teams, and they may bypass the verification steps they would normally follow.

Why it’s effective: Trust and speed of the finance teams: these are what the attackers prey on. Invoices are something they regularly handle, and most of them are from well-known sources. So, without a robust defense process and trained eyes, invoice fraud is difficult to detect. 

How Attackers Exploit Routine Finance Workflows

1. Common Entry Points

• Mining public data is the very first step of the attack. The attackers gather all details like past tenders, contracts, vendor relationships, etc, from online portals, company websites, and LinkedIn. Sometimes, even press releases that announce supplier partnerships can provide criminals with a roadmap of who to impersonate.
• Email thread hijacking is another exploitation method used by attackers. Here, the criminals gain access to a vendor’s mailbox most commonly through credential theft. Now, they can monitor all the conversations for weeks or months. They keep on waiting for the right moment, such as just before a payment is due. Now all they need to do is just insert a fraudulent invoice that blends seamlessly into the thread.
• Lookalike domains are also a very important entry point for attackers. They register domains that may differ by just a single letter, number, or punctuation mark (e.g., paytr0nic.com vs. paytronic.com).  This is an easy way to trick recipients who may only glance at the sender’s address. This is more common on mobile devices, where the full address is shortened.

2. Psychological Tactics

• “This invoice is overdue; please process it immediately.” 

This kind of urgency puts finance teams under pressure, and they may not follow up on the process of verification.

• “We’ve updated our bank details; please use the new account for this payment.” 

This request often has an attached PDF, which is quite convincing to the finance teams if they don’t have trained eyes. 

When it comes to exploiting human trust, perceived authority, and the fast-paced nature of finance operations, these appeals do the job, and most importantly, they increase the chances of bypassing standard security checks. 

Why These Attacks Work

• The finance teams usually remain under heavy pressure. They need to deal with dozens or hundreds of invoices regularly, and so when it comes to deep scrutiny, there is very little time left. 
• As the attacker uses trustworthy vendor names or they appear to be a known vendor or internal contact, it reduces the suspicion of the finance teams. 
• This type of attack has no malware or malicious links, so the security tools are not effective here, and the tools often let them pass.

Invoice Fraud Prevention Starts with Awareness + Process

Human training, policy enforcement, and technology: A robust invoice fraud prevention strategy needs to be a blend of all three. Have a look at this checklist now. 

Checklist for Finance Teams

1. Verifying sender domains is crucial, and even minor spelling changes can indicate fraud.
2. You must confirm payment changes via a second channel. This can be done through phone verification or in-person confirmation.
3. Don’t forget to flag high-urgency requests with account changes. You must treat these as high-risk until the process of verification is completed.

The Zero Trust Approach to Invoice Fraud Prevention with Threatcop

Assess – TSAT (Threatcop Security Awareness Training)

• Simulate fake invoice scenarios using spoofed vendor branding.
• Track behavioral responses – who opens, clicks, or forwards.
• Identify high-risk individuals in finance, AP, and procurement teams.

Aware – TLMS (Threatcop Learning Management System)

• Role-based training and security awareness games for finance and procurement staff.
• Teach bank detailed verification procedures and vendor identity validation.
• Include red flag checklists for invoice authenticity.

Protect – TDMARC (Threatcop DMARC Implementation)

• Block spoofed domains with SPF, DKIM and DMARC.
• Use BIMI (Brand Indicators for Message Identification) to display verified logos in inboxes.
• Detects lookalike domain registration attempts targeting your vendor base.

Empower – TPIR (Threatcop Phishing Incident Response)

• Enable one-click reporting from employee inboxes.
• Use sandbox analysis to inspect suspicious invoice attachments.
• Build real-time reporting dashboards to track and respond to fraud attempts.

Real vs. Fake Invoice: Side-by-Side Comparison

Attribute	Real Vendor Invoice	Fake Vendor Scam
Domain	Known & verified	Slight misspelling or extra character
Bank Info	Previously used	“Updated account” notice
Language	Consistent tone & style	Excessive urgency or unusual formality
Contact	Known POC	New or “delegated” contact

Practical Prevention Tips for CFOs & AP Managers

• Implementation of dual-approval workflows for all payment changes.
• Making it mandatory for all vendors to fill out vendor bank change forms with formal authorization.
• Maintenance of a vendor contact registry for cross-verification.
• Scheduling quarterly invoice fraud drills with simulated attacks.
• Integration of invoice scanning tools that flag anomalies in account numbers.

Conclusion

Finance teams, are they just processing payments? No, they are not. At present, they are actively defending against invisible attackers posing as trusted partners.

Invoice fraud prevention isn’t just a cybersecurity issue today. Rather, it’s a finance governance and risk management mandate. As you implement simulation (TSAT), role-based awareness (TLMS), domain protection (TDMARC) and real-time reporting (TPIR), organizations can significantly reduce their risk exposure.

Just an overlooked invoice, and it would result in a six- or seven-figure loss. So, take steps right away, and if in doubt, cybersecurity experts are always there to help you out. Get in touch now!