Vendor Fraud Is a Growing Problem for U.S. Businesses

ALLENTOWN, Pa.--Most businesses today rely on vendors and suppliers for many reasons – be it to manufacture goods before they’re shipped to customers or to perform certain services that will help the business maintain operations. Regardless, vendors and suppliers are a critical part of the operational flow of businesses. But as Creditsafe’s Battling Vendor Fraud research study reveals, vendor fraud can throw things into disarray if it’s not spotted early and can cost businesses millions of dollars.

As the study reveals, 53% of U.S. businesses reported already being hit by 6 fraud cases in 2024 and another 41% have been hit by 7 or more fraud cases this year. Based on these figures, it’s likely that if a company has already had 7-9 fraud cases as of August 2024 (when the survey was fielded), then they could end up with 10-12 total fraud cases by the end of this year.

What’s especially worrying is that over half (52%) of the respondents reported that they lose over 30% of their total revenue to fraudulent activities each year. While this amount will vary depending on a company’s annual revenue, it could end up leading to millions of dollars in losses a year for larger companies. Together, these findings illustrate why it’s important for companies to make sure they have the right data in front of them before working with and paying vendors. On top of that, finance teams should be doing the necessary due diligence and cross-checking information in vendor invoices to make sure they aren’t inadvertently making duplicate invoice payments or falling prey to fake invoice scams.

Highlights from the report include:

Steve Carpenter, Country Director of North America at Creditsafe, sees fraud as one of the biggest challenges finance teams will face in coming years. “What I find especially interesting is that many businesses don’t realize that fraud is able to thrive because of poor data quality. Let me give you an example. You may be working with a vendor who uses a DBA (Doing Business As) instead of a legally registered name. Now if your team is using a CRM platform and the data for that vendor doesn’t match with the legally registered name of the company, you could find yourself in the situation of missing a fraud red flag if the company’s legal name is used on an invoice when all the other invoices were submitted using the vendor’s DBA name. Of course, data quality isn’t the only factor that can increase the risk of vendor fraud. As our study indicates, the quality and efficacy of training plays a major role in a company’s success rate of detecting and preventing vendor fraud.”

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