Dive Brief:

• President Donald Trump’s fast-changing tariff decisions have set the stage for global supply chain disruptions that could lead to increased vendor fraud, according to fraud prevention experts.
• The current environment could provide an opening for fraudsters as companies rushing to mitigate the potential risks of Trump’s tariffs experience upheaval in their supply chains and relationships with third-party vendors, experts told CFO Dive.
• “Fraudsters can try to take advantage of the fact that many companies don’t have the right processes in place for working with new vendors, especially when it comes to handling bank accounts and payments,” Baptiste Collot, CEO of fraud prevention firm Trustpair, said in an interview.

Dive Insight:

Nine in 10 U.S. companies last year were targeted by cyber fraud activities, representing a 14% increase over 2023 levels, according to a Trustpair report released in February. The surge is largely driven by fraudsters’ rapid adoption of artificial intelligence, which has made it easier for fraudsters to generate highly convincing impersonations and social engineering attacks, the report said.

Such scams can include impersonations of vendors. Nearly 70% of surveyed companies were targeted by vendor fraud last year, up from 47% who said this a year earlier.

The problem is only expected to worsen as fraudsters continue to leverage advanced technologies and exploit avenues such as supply chain disruptions, the study found. One in four respondents said that supply chain or third-party relationship changes will most likely lead to a higher risk of payment fraud at their organizations this year.

The risks have substantially escalated in the months since Trustpair released its report, as the Trump administration’s trade and tariff policies have thrown businesses into shock and desperation, according to Lee-Ann Perkins, a treasury professional who contributed to the study.

“We assumed with the new presidency that we would see changes such as tariffs coming in, but this has happened so quickly and almost overnight,” she said in an interview, adding that tariff-fueled supply chain disruptions are creating “a fertile ground for vendor fraud.”

There’s a rush to “ensure you get as many products as you can before any tariffs go into effect and onboard new suppliers quickly,” she said. “You basically have desperation to avoid any financial impact from the tariffs, but teams are not as focused on who they’re paying. It’s a less obvious but increasingly dangerous side effect of all the global trade disruptions and economic uncertainty.”  

The situation is reminiscent of the COVID-19 pandemic, which triggered “very urgent vendor sourcing and payment pressures for companies,” Perkins added.

Trustpair’s research found that payment fraud is taking a bigger financial toll on companies. Nearly 60% of respondents said the financial impact of payment fraud in 2024 was over $5 million compared to just a quarter who said this in the year prior, a more than three-fold spike.

Steps such as automating vendor verification procedures and bank account validations are key, according to the report.

“It’s not always front of mind for CFOs or other leaders in the organization, but operational urgency and weak controls are definitely a recipe for fraud, and it’s exacerbated in a time of distress,” Perkins said.