What is B2B Payment Fraud and How Can You Prevent it?

Payment fraud is the illegal interception or theft of money and/or payment-related data. Business-to-business (B2B) payment fraud is the same misdirection or outright theft of payments made between two businesses, and it commonly happens between a payer and one of their vendors.  

Fraud is one of the greatest threats out there to an organization’s finances, stability, and reputation. Every year, businesses lose billions of dollars because of unscrupulous employees, complex schemes targeting finance teams, and even errant clicks on malicious links in emails. It is remarkably difficult to dodge fraud, but failing to do so can cripple a business for months or even years.  

Here, we’ll look at the scope of the problem further, dive into common types of schemes, and discuss how to prevent B2B payment fraud.  

Understanding the Size of the Fraud Problem 

According to the FBI, Business Email Compromise (BEC) alone has cost businesses $55.5 billion over the past decade. The Association of Finance Professionals found in its 2025 survey that 79% of businesses reported experiencing fraud attempts in the last year.  

Successful attempts are costly, too, with AFP finding that just 22% of businesses were able to recover a majority of funds. LexisNexis found that for every dollar lost to fraud, $4.60 was spent by a business to recover funds, mitigate damage, and shore up defenses.  

The financial damage is heavy, but it goes beyond the initial lost funds. Often in a fraud incident, critical business data from either you or your vendors is compromised. Companies must then spend additional time and money to determine the full extent of the information lost, the accounts that were compromised, and if there was any involvement with inside parties.  

Each B2B payments fraud incident also creates shockwaves that can impact business relationships. If a vendor is compromised, you might lose faith in them and think twice about purchasing from them again. You’ll also have missing funds that you may not be able to recoup or an angry vendor who has not received that payment. If you are a vendor and your payer is compromised, meanwhile, your money may be delayed considerably, straining cash flow and causing hard feelings in the opposite direction. Major fraud incidents that snare multiple vendors or payers can seriously damage public reputations, too. 

That was always a problem, but when email schemes were clumsy, they generally only snared the inattentive and the unaware. The days of Nigerian prince scams that are transparent and easy to see through are largely over, though. 

Our in-house risk officer, Katie Elliott, warns that fraudsters can execute fraud at scale because email and artificial intelligence advances have made schemes and scams cheap, easy, and fast to execute. The combination of savvy bad actors, the outsized costs to victim organizations, and the prevalence of fraud makes B2B payment fraud prevention more important than ever. 

The ubiquity of fraud also means recognizing the types of swindles is extremely important for your business.  

Common Types of B2B Payment Fraud 

There are many kinds of fraud to look out for, but they generally fall into a few familiar buckets. Here are the most likely to be encountered.  
 

Business Email Compromise (BEC) 

Business Email Compromise is the most common type of fraud in the world today, with 63% of AFP survey respondents citing it as the scheme they see most often BEC is any scenario where a fraudster has either compromised a vendor email or attempts to compromise your systems by spoofing a legitimate business. This could take the form of your “vendor” asking you to change bank account information for an upcoming payment or your “CEO” asking you to make an urgent payment to a business. 

Either way, the hallmarks of a BEC scam are a real-sounding message that sounds urgent and comes from a close-but-not-quite accurate email address. The best defenses against BEC are vigilance from your finance team and domain verification from your information technology group. Even with these protections, BEC remains difficult to stop - it resulted in $3 billion in US business losses in 2023 alone.  
 

Check Fraud 

Whether it’s stealing a check from the mail and having it pay out to a fraudulent Limited Liability Corporation (LLC) or using other tactics mentioned in this list to have a check sent to a fraudulent business or account, check fraud is insidious and common. A full 65% of businesses reported experiencing a check fraud attempt. Thankfully, given that checks are also slow and costly, many businesses are working to phase them out, reducing the incidence of check fraud.  
 

Account Takeover 

When a fraudster takes control of accounts directly and can drain money or redirect funds to their own accounts to steal them, that’s takeover. Payments directed to compromised accounts are often gone before the fraud is even discovered and access can be restored to the rightful account owner. The information unique to those accounts often leads to further fraudulent activity, too.  
 

Identity Theft 

This goes beyond mere impersonation. When a bad actor has all the identifying information and/or artificial intelligence ability to spoof a person’s voice and other elements of their identity, it’s known as identity theft. When that theft is effective, a scammer can effectively mimic an employee or vendor to misdirect payments. 
 

Invoice Fraud 

Any kind of attempt where a fraudulent invoice is used to try to misdirect payments. This can be done as a form of BEC, where the invoice is emailed from a fake account, or an accurate-seeming invoice can be mailed directly to a business. 

Either way, the rise of AI as a tool for fraudsters has made it possible to generate extremely real-seeming invoices that require extra scrutiny and powerful fraud prevention tools to detect.  
 

Insider Fraud 

In many ways, insider fraud is the most difficult type of fraud to stop. You need to trust your employees to have a functioning business, but bad actors will take advantage of that trust to skim payments or outright steal them. In 2023, a staggering 71% of large businesses told the Ponemon Institute that they had 21-to-40 insider fraud attempts a year. Where there’s opportunity for financial gain and lax controls, internal bad actors can take advantage.  

Syteca found it takes an average of 86 days to discover and clean up an insider fraud incident, while other studies have suggested it can take up to 32 months. Regardless of the exact timeline, insider fraud can lead to terminations, significant financial losses, and a difficult recovery process for impacted businesses.  

How to Prevent B2B Payment Fraud  

There is no single measure you can take that will prevent 100% of fraud attempts. A blended approach that combines knowledge of what to look for, training, and powerful fraud prevention systems is going to be your best bet. Here’s what to prioritize.  

• Vigilance. Your front-line defense against any type of fraud is a workforce that is naturally wary and knows how to spot red flags. Stress the importance of taking an extra moment to consider any email or phone call that sounds suspicious or too urgent, and to pick up the phone and make a call directly to your CEO, your vendor, or whoever else is ostensibly asking for a payment to be directed in an unusual way. Create a culture of accountability and trust where employees won’t feel penalized for caution, even if their day-to-day takes a little longer than usual.  

• Training. While being cautious (or vigilant) is a good start, employees need to be trained in what to look for. Have in-house experts, external organizations like the Association of Certified Fraud Examiners, and experienced fraud prevention trainers provide on-demand and live courses that help employees spot suspicious behavior from co-workers, vendors, and banks that might suggest a fraud attempt. Refresh training on at least an annual basis, as tactics change regularly.  

• Use more secure payment types. Which payments are the most secure? Certainly not checks, for reasons outlined earlier in this article. Businesses are increasingly turning to ACH payments made through secure networks (more on that in a moment) and single-use virtual cards to prevent fraud. These payment types are more difficult to intercept or misdirect because of the controls inherent to them.  

• Internal controls. Speaking of controls, having robust ones to prevent employee theft and outside fraud have become critically important. That can take the form of controlling the number of payment approvers, actively monitoring actions within payments systems, and IT-led steps like domain validation for emails and flagging and routing of suspicious emails. Controls like these prevent employees from constantly having to scan every single message they receive and discourage bad actors internally and externally from testing a company’s defenses.  

• Secure payments networks and vendor enrollment. Finally, consider making your payments through a network with end-to-end protection. With vendor enrollment to authenticate businesses, multi-factor authentication protecting account changes, and AI-and-expert-aided monitoring, business payments networks are able to prevent most fraud attempts from ever getting off the ground. Having a third party collecting and holding vendor bank account information is particularly effective at shutting down BEC, as compromised vendors can’t easily change those details and are often discovered well before they can do damage. It’s important not to trust a small team internally to handle the arduous task of vendor data management all on their own.  

B2B payments fraud comes with significant reputational and financial costs, making prevention worth many pounds of cure. By using a layered, savvy prevention strategy that leans on technology, expertise, and vigilance, you can avoid being counted among the many victims of B2B payments fraud that are still struggling to recover from these attacks.

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