Vendor and supplier fraud is a growing threat to small businesses, costing billions each year. Scammers pose as legitimate vendors, send fake invoices, or impersonate trusted suppliers—all with the goal of tricking you into sending payments or sharing sensitive data.
For small business owners juggling operations, finances, and security, these scams can slip through unnoticed—until it’s too late. In this article, we’ll cover how to identify a fake vendor, spot red flags, and protect your company using proven business identity theft protection and business fraud protection strategies.
Why do scammers target vendors and suppliers?
They exploit payment systems and human error
Vendor scams work because they target the systems businesses rely on every day. Cybercriminals know that accounts payable departments process hundreds of invoices and emails regularly. A well-timed, legitimate-looking request can go undetected and result in significant financial loss.
Small businesses often lack verification processes
Large corporations typically have strict vendor verification protocols. Small businesses, however, may have more informal procedures—making them easier targets for supplier impersonation, invoice fraud, and phishing attacks.
What are the red flags of a fake vendor scam?
Urgent or unusual payment requests
Scammers often use pressure tactics—”Pay immediately to avoid penalties” or “New banking details for urgent transfer.” If something feels off, trust your instincts and verify independently.
Slight changes in email addresses or domains
An email from invoices@yourvendor.co instead of invoices@yourvendor.com might go unnoticed, especially in a busy inbox. This is a classic phishing trick.
Unfamiliar vendors requesting payments
If your team receives an invoice from a vendor you’ve never used, pause. Call the supposed vendor using contact information from your records (not the email) to verify legitimacy.
Requests for payment method changes
Fake vendors often try to reroute payments to fraudulent accounts by asking you to change banking or wire information. Always verify such requests through a secondary channel.
How do scammers impersonate real vendors?
Compromised vendor email accounts
If a real vendor’s email has been hacked, scammers may use it to send fraudulent invoices. Since it comes from a familiar address, your team may comply without suspicion.
Fake vendor profiles and websites
Scammers may create fake websites, phone lines, and profiles that mimic real vendors. These may even show up in search results or directories.
Social engineering through phishing
Attackers may gather intelligence through phishing emails or fake calls to learn your vendor relationships. They then craft highly personalized scams to increase the chance of success.
How can small businesses vet vendors properly?
Verify all new vendors independently
Before sending payments or contracts, verify vendor legitimacy through:
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Official websites and domain registration tools
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Independent phone calls (not numbers in the email)
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Company references or Better Business Bureau profiles
Use a vendor approval workflow
Even in small businesses, it’s important to set up clear procedures for approving vendors and validating invoices. Use multi-person reviews and keep contact details documented.
Confirm changes in payment info by phone
Never change payment details based solely on an email. Call your vendor directly using a trusted number to confirm the request.
What role does cybersecurity play in prevention?
Protect your email and data systems
Scammers often start by compromising your email or a vendor’s email. Secure your accounts with strong passwords, multi-factor authentication, and phishing-resistant tools.
Our Business Cybersecurity Assessment can help you uncover vulnerabilities that scammers exploit to launch fake vendor attacks.
Monitor for signs of identity misuse
Scammers don’t just impersonate vendors—they may also pose as your business. Business identity theft protection helps you detect impersonation and fraud attempts in real time. BizDefender provides affordable, powerful protection to keep your business and brand safe.
Run dark web scans for breached data
Leaked employee credentials are often used to initiate fake vendor scams. Use our Free Dark Web Scan to find out if your email addresses or passwords are circulating online.
What to do if you suspect a vendor scam
Stop communication and block suspicious contacts
Immediately halt all contact with the suspicious party. Block email addresses, flag phone numbers, and notify your IT or cybersecurity support team.
Report the incident to authorities
File a report with:
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The FBI’s Internet Crime Complaint Center (IC3)
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Your local law enforcement
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Affected vendors or partners
Document everything and alert your bank
If payments have been made, notify your bank immediately. You may be able to stop or reverse the transaction depending on how quickly you act.
Can vendor scams lead to identity theft?
Yes—and they often do. Once scammers have access to sensitive company data, they can impersonate your business to secure loans, create fake listings, or launch new attacks. That’s why business fraud protection is a critical piece of any vendor management strategy.
Our Business Identity Theft Protection tools help you stay ahead of these evolving threats and give you peace of mind as your company grows.
Final thoughts: Trust, but verify
Vendor relationships are built on trust—but today’s scammers exploit that trust. The solution isn’t paranoia—it’s process. A strong combination of verification, business fraud protection, and cybersecurity hygiene will help your business avoid costly vendor scams.
Start securing your business today:
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Get a Free Dark Web Scan
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Request a Cybersecurity Assessment
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Activate Business Identity Theft Protection
Don’t wait until you’ve wired money to a scammer. Get BizDefender on your side.
Frequently Asked Questions
What is a fake vendor scam?
A fake vendor scam involves fraudsters impersonating legitimate suppliers to trick businesses into sending money or sensitive information.
How can I confirm if a vendor is legitimate?
Call the vendor using a known phone number, check their website, and verify payment details independently. Avoid acting on email requests alone.
What should I do if I paid a fake vendor?
Notify your bank immediately and file a report with IC3. Also, inform your cybersecurity team and review your internal controls to prevent future incidents.
Can fake vendor scams lead to identity theft?
Yes. Once scammers have your business information, they may impersonate your company to commit fraud. Use business identity theft protection to stop them.