Invoice Fraud and Fake Supplier Bank Details: Red Flags for Purchasing

Invoice fraud happens when a criminal poses as one of your suppliers and persuades your company to pay a real or fake invoice into an account the criminal controls. The most common trigger is a message saying the supplier's bank details have changed. The single most effective defence is simple: never accept new bank details without calling the supplier on a phone number you already have.

What is invoice fraud?

Europol and the European Banking Federation describe invoice fraud as scammers pretending to be a client or supplier and convincing the victim to send future payments to a different bank account. Europol's prevention leaflet adds that the contact can come by phone, letter or email, usually asking for the bank details on future invoices to be changed.

The UK National Crime Agency uses the term payment diversion fraud and notes that it is also called business email compromise or mandate fraud. It describes criminals who create or alter invoices and redirect payments into accounts they control, and says small and medium businesses are especially exposed.

How invoice fraud differs from CEO fraud

In CEO fraud, the criminal impersonates a senior manager inside your company and pressures a colleague into an urgent transfer. In invoice fraud, the criminal impersonates someone outside: a supplier, a service provider or a creditor. Both rely on pressure and on payments being made without an independent check.

Fake suppliers

A related scheme is the fake supplier: a company that never intends to deliver, set up to collect prepayments. Here the bank account may genuinely belong to the "supplier", but the business behind it is not real. Register and VAT checks catch most of these; see our supplier verification checklist.

Invoice fraud red flags for purchasing and accounts payable

Most invoice fraud attempts share a few patterns. Train everyone who orders, approves or pays to stop when they see one of these.

• A request to change bank details, especially just before a large payment is due.
• Urgency: "our account is blocked", "pay today or the order will be cancelled".
• A slightly different email address or domain, for example one letter changed or a different ending.
• Different tone or wording from the way the supplier usually writes, or spelling errors, as the NCA points out.
• A new account in another country, or held in a name that is not the supplier's legal name.
• Contact details only in the message itself, with a new phone number to "confirm" the change.
• A request to keep it confidential or to bypass the usual approval.

A message linked to invoice fraud may refer to a real order, real amounts and real people, for example if an email account has been compromised. A convincing message is not evidence that it is genuine.

How to prevent invoice fraud: a procedure for bank detail changes

Europol recommends that businesses verify every request to change a creditor's bank details using contact details from previous correspondence, not those given in the request. Turn that advice into a written procedure like this:

1. Freeze the change. Do not update the supplier record or pay to the new account until the change is confirmed.
2. Call back on a known number. Use the number from your supplier record or the original contract, never the one in the message.
3. Speak to someone you know and ask them to confirm the old and new account and the reason for the change.
4. Use a second person. One person confirms, another approves the change in the system.
5. Check the account holder name. It should match the supplier's legal name in the business register.
6. Watch the first payment. Consider a small test payment and ask the supplier to confirm receipt.
7. Record everything: who called whom, on which number, when, and what was confirmed.

Europol also suggests designated single points of contact with suppliers you pay regularly, telling the payee after payment which bank and the last four digits of the account were used, and limiting what staff share online about contracts and suppliers.

Verification of Payee: the new bank check in the EU

Banks now provide an extra safeguard, because the Instant Payments Regulation, Regulation (EU) 2024/886, requires payment providers to offer Verification of Payee for euro credit transfers. According to Bird & Bird, the check matches the payee's IBAN against the name before you authorise the payment. Providers in the euro area had to offer it from 9 October 2025; those outside the euro area follow by 9 July 2027.

What the Verification of Payee results mean

The European Payments Council scheme returns a match, a close match, no match or a notice that the check was not possible. For you as the payer, this means the following in practice:

• Enter the supplier's legal name exactly as registered, so genuine payments return a match.
• Treat "no match" or "close match" as a reason to call the supplier, not as a formality to click through.
• Know that businesses can opt out for bulk payment files. If you send batches, check whether your process includes the check.
• Commerzbank's guidance notes that if you approve a transfer despite a no match or close match, you accept the risk of paying the wrong payee.

What to do if invoice fraud succeeds

Speed matters, and the NCA advises acting immediately, because quick reporting gives the best chance of recovering funds.

1. Call your bank at once and ask it to recall the payment.
2. Report the crime to the police in your country, and keep all emails and documents.
3. Warn the real supplier: their email account may have been compromised.
4. Have your own email accounts checked as well, since you cannot tell at first which side was compromised.

Europol advises reporting attempts to the police even when no money was lost.

Supplier checks on Flobid

Flobid's "VAT-checked" and "Verified" badges confirm that a supplier's VAT number is valid and, for Verified suppliers, that the company exists in its national register. They do not confirm bank details and cannot stop invoice fraud on their own, so always confirm the account directly with the supplier before the first payment. Read more on our verification page, and see how to look up a company in European business registers.

Sources

1. #CyberScams: invoice fraud, Europol
2. Europol and the European Banking Federation launch awareness campaign on 7 most common online financial scams, European Banking Federation (2018)
3. Payment Diversion Fraud? What you need to know, and how to protect yourself, National Crime Agency (UK)
4. Instant Payments Regulation, Bird & Bird (2024)
5. Publication of the first Verification Of Payee scheme rulebook, European Payments Council (2024)
6. Verification of Payee (VoP) FAQ, Commerzbank