--- title: Invoice Fraud: Common Types and How to Stop Them | Aavenir url: https://aavenir.com/what-are-invoice-frauds-with-automated-invoice-validation-fraud-detection-software/ description: Common types of invoice fraud, from inflated and fake vendor invoices to duplicates and payment redirection, the red flags to watch and the controls that stop them. updated: 2026-11-08 --- [Home](https://aavenir.com/) / [Blog](https://aavenir.com/blogs/) / Invoice fraud Accounts payable automation # What is invoice fraud, and how do you stop it? Fraudsters count on volume. Invoices that are slightly off, from vendors you already use, are the hardest to catch. NP **Nupur Patel**Aug 13, 2021 ยท 4 min read Invoice fraud happens when someone tricks an organization into paying for goods or services that were never delivered, or into sending a real payment to the wrong account. It affects large companies with mature controls as much as small businesses. The FBI's Internet Crime Complaint Center has warned repeatedly about business email compromise, much of it carried out through fake or altered invoices and payment instructions. As more invoicing moves online, the tactics keep evolving. This guide, refreshed for 2026, describes the most common types of invoice fraud, the red flags to watch for and the controls, manual and automated, that stop it. Key takeaways - Common schemes include inflated invoices, fake vendor invoices, duplicates and payment redirection - Fraud often uses small amounts and familiar vendors to avoid attention - Matching against purchase orders, receipts and contracts catches most altered invoices - Changes to supplier bank details must always be verified outside the email that requested them - AI helps by checking every invoice, while people approve every exception ## What are the common types of invoice fraud? ### 1. Inflated invoices A fraudulent or altered invoice charges more than was agreed. The increase is usually small enough not to raise questions, and the fraudster relies on volume rather than one large payout. **Controls:**match every invoice against the purchase order and the contract rate, and automate the comparison so small differences are not missed. Watch for red flags such as a logo that looks wrong, poor grammar, new contact details or bank accounts, round amounts and repeated figures. ### 2. Fake vendor invoices An invoice appears to charge for legitimate goods or services from a vendor the company uses regularly, but nothing was delivered. Because the vendor is familiar, nobody questions it. **Controls:**require a purchase order and a goods or service receipt before payment. If the goods cannot be found in inventory or there is no purchase order, stop and investigate. ### 3. Duplicate invoices Duplicates are a large source of leakage. [AuditNet](https://www.auditnet.org/audit-news/articles/accounts-payable-fraud-10-ways-to-identify-it) lists them among the main signs of accounts payable fraud. Insiders may resubmit an invoice, and outside parties may send copies with small changes, hoping they pass. Not all duplicates are fraud, but they are a common tactic. Read about [duplicate invoices](https://aavenir.com/what-are-duplicate-invoices/). **Controls:**set a standard policy for entering invoice numbers, including rules for prefixes, capitalization and punctuation, and use duplicate detection that compares invoices across many fields, not just exact matches. ### 4. Payment redirection A fraudster impersonates a real supplier, often through a compromised or look alike email account, and asks for future payments to go to a new bank account. The invoices are genuine. The destination is not. **Controls:**never change bank details based on an email alone. Confirm by phone using contact details already on file, require a second approver for any change, and hold the next payment to a changed account for extra review. ## What red flags should accounts payable watch for? - New or changed bank details, especially requested urgently - Invoices from vendors with no purchase order or no receipt - Round amounts or the same amount repeated across invoices - Invoice numbers out of sequence or with small changes - Unusual pressure to pay quickly or to skip normal approval - Sender email addresses that differ slightly from the known domain - Vendors with a post office box only, or details matching an employee **See every invoice checked, not just a sample**Watch Aavenir AI validate an invoice against the purchase order, receipt and contract, and route the exception to a person. Schedule a demo ## How does automation reduce invoice fraud? Prevention starts with a thorough, consistent review process, and consistency is where automation helps most. A person can check a sample of invoices closely. Software checks all of them the same way, every time. | Control | What automation does | | Matching | Compares each invoice with the purchase order, receipt and contract terms | | --- | --- | | Duplicate detection | Compares new invoices with history across many fields | | Vendor verification | Validates vendor records at onboarding and flags changes to bank details | | Approval rules | Enforces thresholds and segregation of duties for every invoice | | Audit trail | Records who approved what, when and why | In [Invoiceflow](https://aavenir.com/solutions/accounts-payable-automation/), Aavenir AI reads each invoice, runs these checks and routes exceptions to a person to approve or reject. Supplier records and bank details are verified through [Onboardingflow](https://aavenir.com/solutions/vendor-onboarding-software/). See [two way and three way matching](https://aavenir.com/what-is-2-way-3-way-matching/). ## What should you do if you suspect fraud? - Hold the payment and do not contact the supplier through details on the suspect invoice - Verify with the supplier using contact details already on file - Inform your finance leadership, internal audit and, if money has moved, your bank immediately - Preserve the invoice, emails and system records - Review recent payments to the same vendor and account for similar patterns ## The bottom line Invoice fraud relies on volume, familiarity and small differences. Match every invoice against the purchase order, receipt and contract, verify bank detail changes independently, detect near duplicates and keep a person approving every exception. ### In this article - What are the common types of invoice fraud? - What red flags should accounts payable watch for? - How does automation reduce invoice fraud? - What should you do if you suspect fraud? **See invoice validation in action**Matching, duplicate detection and approval rules, with your team deciding every exception. Share [in](https://www.linkedin.com/sharing/share-offsite/?url=https%3A%2F%2Faavenir.com%2Fwhat-are-invoice-frauds-with-automated-invoice-validation-fraud-detection-software%2F)[X](https://twitter.com/intent/tweet?url=https%3A%2F%2Faavenir.com%2Fwhat-are-invoice-frauds-with-automated-invoice-validation-fraud-detection-software%2F&text=What%20is%20invoice%20fraud%2C%20and%20how%20do%20you%20stop%20it%3F) Frequently asked questions (FAQ) ## Frequently asked questions ### ### What is invoice fraud? Invoice fraud is any scheme that tricks an organization into paying for goods or services it did not receive, paying more than agreed, paying twice or sending payment to the wrong account. It often uses familiar vendors and small amounts. See [Invoiceflow](https://aavenir.com/solutions/accounts-payable-automation/). ### ### How can companies prevent payment redirection fraud? Never change supplier bank details based on an email alone. Confirm by phone using details already on file, require a second approver for changes and review the first payment to a changed account. Verified vendor onboarding helps. See [Onboardingflow](https://aavenir.com/solutions/vendor-onboarding-software/). ### ### Does automation stop invoice fraud? Automation checks every invoice consistently against the purchase order, receipt and contract, detects near duplicates and enforces approval rules. That catches most altered or fake invoices. People still review exceptions and approve payments. Read about [duplicate invoices](https://aavenir.com/what-are-duplicate-invoices/). Have a question we have not answered? [Ask the Expert](https://aavenir.com/contact/) ## Keep reading [Accounts payable automation Duplicate invoices: what they are and how companies use AI to catch them What duplicate invoices are, why exact match checks miss them, the common causes and how AI and better vendor data stop duplicate payments before they happen. Read more](https://aavenir.com/what-are-duplicate-invoices/)[Accounts payable automation What is two way and three way invoice matching? Two way matching checks an invoice against the purchase order, three way adds the goods receipt. How each works, when to use them and how automation helps. Read more](https://aavenir.com/what-is-2-way-3-way-matching/)[Accounts payable automation The advantages of payment automation for accounts payable managers What payment automation does for accounts payable managers: faster processing, fewer errors, better control and stronger fraud defenses, plus how to roll it out. Read more](https://aavenir.com/the-advantages-of-payment-automation-for-ap-manager/) Schedule a demo ## See your contracts run on one record. - **1****A 30 minute walkthrough**Built around your team, whether that is procurement, legal, IT or finance. - **2****Your contracts, not ours**Bring a few sample agreements and watch Aavenir AI extract and review them. - **3****ServiceNow or standalone**We show the deployment that fits the systems you already run. Prefer to talk first? [Contact the team](https://aavenir.com/contact/). The form did not load. [Contact the team](https://aavenir.com/contact/) instead, or refresh the page.