The Invoice Doppelgänger: How to Spot and Prevent Invoice Fraud in Your Business.
Invoice fraud is a growing concern for businesses everywhere, and it’s only getting worse. In fact, companies lose billions every year to this classification of fraud. One of the most problematic forms of this scheme is what’s called the “invoice doppelgänger.” Essentially, fraudsters use clever tactics to mimic real invoices and trick businesses into paying them. The worst part? They’re getting really good at it. So, how can you protect your business from this type of fraud? Let’s break it down.
Who’s at Risk? Spoiler: It’s Everyone.
The truth is, no business is immune. I spoke with one of our partners at Intellex, Dan Pruett, about businesses at risk of invoice fraud. He noted, “No matter if you’re a small startup or a large company, having accounts payable makes you a potential target.” Fraudsters don’t need a lot of time or sophisticated tech to get in—they simply exploit gaps in the payment process. They often start by sending phishing emails to get access to your email system. Once they’re inside, they gather details about your existing invoices and vendors, and use that info to create fake invoices that look almost identical to the real thing.
How the Scam Works: The Fake Invoice Trick.
Here’s how it plays out: the scammer creates a fake invoice that looks almost exactly like something you’d expect to see from one of your legitimate suppliers. They might change the name slightly or tweak the email address just enough to seem believable. They even go so far as to copy logos, project descriptions, and formatting; everything to make the invoice seem totally real. The only problem? The payment info goes straight to them, not the vendor.
Despite the rising number of these scams, many businesses still don’t have enough checks in place to catch them. A survey from 2024 found that 17% of companies don’t double-check payment details, which leaves the door wide open for fraudsters.
The Trick: Why It’s So Hard to Catch.
I asked the managing director of Intellex Forensics, Eric Stephens, why the invoice doppelgänger scam is so effective? In his simple response, “Because of the pressure it puts on employees.” Fraudsters often craft these fake invoices to look like they need to be paid right away, creating a sense of urgency. If someone feels rushed, they’re less likely to scrutinize every little detail, which is exactly what the scammers are counting on. And once the payment goes through, it’s often too late to do anything about it.
To make things even trickier, fraudsters often delete or alter emails to cover their tracks. This makes it even harder to figure out where the scam came from or how it started.
How to Protect Your Business: Building a Strong Defense.
The good news is, there are steps you can take to protect your business from invoice fraud. It all starts with a combination of strong security measures, employee training, and a healthy dose of skepticism.
- Slow Down and Double-Check: It’s tempting to rush through invoices, especially when everyone’s busy. But taking an extra few minutes to verify the details can save you from a major headache down the line. Make sure the invoice matches your records, and if something seems off, get confirmation from the vendor through another communication channel—like a quick phone call or separate email.
- Multiple Approvals for Larger Payments: Set a policy where invoices above a certain amount need to go through more than one person before payment. This adds an extra layer of protection and gives another set of eyes a chance to catch anything that doesn’t look right.
- Trust Your Gut: Encourage your accounts payable team to trust their instincts. If an invoice feels a little off—whether it’s an odd email address, a last-minute payment request, or anything else that doesn’t feel right—take the time to verify. It’s always better to be cautious than to rush into a payment.
A 2024 survey found that 13% of businesses reported attempted invoice fraud last year, with 9% of those scams being successful. This is a growing problem, but with the right precautions, you can avoid becoming another statistic.
The Impact: What’s at Stake?
The cost of invoice fraud can be staggering. On average, U.S. businesses lose about $133,000 per incident. But the damage doesn’t stop there. You’ll also have to spend time and money investigating the fraud, and your company’s reputation could take a hit as well.
The effects of fraud can ripple out to disrupt relationships with vendors, affect cash flow, and even lead to legal or regulatory issues. I asked an associate and CFE at Intellex, Isaac Harrill, about the broader impacts of invoice fraud. He emphasized, “It’s not only about losing money; the time and energy required to recover can be much more challenging than preventing the fraud initially.”
Need Help? Get Expert Support.
If your business does end up falling victim to invoice fraud, don’t panic. There are experts who can help you get things back on track. Companies like Intellex Forensics specialize in forensic reviews and fraud investigations. They can help you recover losses, track down the fraudster, and implement safeguards to prevent it from happening again.
I asked Jaxon Hughes, an associate and CFE at Intellex, about fraud prevention services. He replied, “We have a strong track record of helping businesses navigate tricky situations and ensure better protection moving forward.”
The Bottom Line: Prevention is Key.
Invoice fraud is a serious problem, but it’s not something you have to face alone. I inquired with fraud prevention expert and managing director at Intellex, Eric Stephens, about reducing the risk of invoice fraud. He stated, “Understanding how these scams work and implementing the right precautions can significantly lessen your chances of becoming a victim.”
The most important thing is to stay vigilant. Take your time to verify invoice details, involve multiple people in approving large payments, and trust your instincts. It’s always better to be safe than sorry when it comes to invoice fraud.
If you enjoyed this article about The Invoice Doppelgänger, check out our previous blog: Feeding Our Future Fraud Case: Five Out of Seven Defendants Found Guilty