B2B fraud affects many US companies, resulting in massive financial losses every year. In fact, according to a survey by the Association of Finance Professionals, 79% of businesses reported experiencing fraud attempts in the last year.
For eCommerce merchants in particular, the risks are growing as more transactions move online and fraudsters become increasingly sophisticated. The good news is that B2B fraud is preventable if you know what warning signs to look for and have the right systems and solutions in place.
Before we dive into how to prevent fraud risks, let's take a look at the data:
As you can see, fraudulent activities are high-impact threats facing US businesses of all sizes. As one example, LexisNexis found that for every $1 lost to fraud, $5.75 was spent by the business to recover funds and mitigate damage.
With attacks becoming more frequent and sophisticated, the figures above only confirm why fraud prevention must be a business priority.
Understanding how fraud happens is the first step to stopping it.
Here are the most common types targeting B2B eCommerce businesses:
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Fraud type |
Description |
Red flags |
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Invoice fraud |
Fraudsters send fake invoices or alter legitimate business bank account details to redirect payments to themselves. |
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Phishing scams |
Deceptive emails or messages trick employees into clicking malicious links, leading to ransomware attacks or data breaches. |
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Business Email Compromise (BEC) scams |
Attackers impersonate executives or trusted vendors via email to authorize fraudulent payments or data transfers. |
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Account takeover |
Cybercriminals gain access to legitimate customer/vendor accounts to place fake orders or steal data. These fraudulent activities account for $2.3 billion in losses annually. |
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Vendor impersonation |
Fraudsters pose as real suppliers to submit fake invoices or redirect payments. |
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Insider fraud |
Employees or contractors exploit their access to commit theft, manipulate transactions, or leak sensitive information. |
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Chargeback fraud |
Buyers dispute legitimate transactions to receive refunds while keeping goods/services. |
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Read more: Defending Your Small Business: 7 Tips to Spot Potential Fraud
Preventing B2B payment fraud doesn't rely on any single solution. It's about layering your defenses across your business operations so security gaps are harder to exploit.
Here are 6 prevention approaches:
Your team is your first line of defense, so training employees to recognize fraudulent indicators (suspicious activity, unusual payments, pressure tactics, etc.) is a must. Make it easy for staff to flag concerns without fear of overreacting.
Add extra defence lines to your account access, payment approvals, and any system that handles sensitive data like multi-factor authentication (MFA). Single-password logins or default security settings open the door for account takeovers. Stronger measures add friction for hackers without creating significant operational headaches for you and your team.
Nearly 50% of B2B companies use address matching and verification tools. AI-driven solutions can be used to verify business legitimacy and transactional behavioral patterns. Device intelligence, like fingerprint or Face ID, can be used to track users' IP geolocation and detect account takeovers common with B2B fraud logins.
Read more: Take Advantage of these Advanced E-commerce Tools
Automated systems can flag unusual activity faster than manual reviews. Look for tools that monitor unauthorized transaction patterns, login activity, and order anomalies in real time. The faster you catch suspicious behavior, the less damage it can do.
Don't let a single employee control an entire system or transaction cycle. Tighten your controls with dual approvals for larger payments, conduct regular audits, and monitor bank accounts and payroll continuously. Insider fraud thrives in environments with loose oversight and excessive trust.
One of the most effective fraud prevention strategies is to shift risk to finance partners built to handle it. [Embedded payment solutions] like Credit Key take on 100% of credit and fraud risk. This means B2B eCommerce merchants still get paid regardless of whether a fraudulent transaction slips through.
B2B fraud isn't going away; if anything, it might get worse. As eCommerce grows, so do the tactics of fraudsters looking to exploit vulnerabilities. But merchants who take prevention seriously (training teams, tightening processes, and partnering with the right finance provider) can drastically reduce the risk of becoming another statistic.
If you're looking to reduce fraud risk while offering flexible payment terms to your buyers, request a demo from Credit Key on how embedded payments can protect your B2B business.
B2B fraud refers to deceptive schemes targeting business-to-business transactions. These include fake invoices, company email compromise, vendor impersonation, and other tactics designed to steal money, goods, or confidential data from other businesses. Unlike consumer fraud, B2B fraud often involves larger transaction amounts and more sophisticated tactics.
Most B2B fraud incidents exploit security gaps. Fraudsters impersonate vendors or executives, submit fake invoices, compromise employee accounts, or manipulate payment details for their own advantage. Businesses with weak verification processes or limited transaction monitoring are the most vulnerable.
B2B financial fraud is on the rise for small businesses. Incidents have jumped by 70% compared to pre-pandemic levels, with most happening on digital platforms. Ongoing economic pressure (inflation, unemployment) has made smaller companies an easy target for fraudsters.
Triangulation fraud is a 3-party scam where fraudsters set themselves up as middlemen between legitimate buyers and sellers. The fraudster poses as a B2B supplier on online marketplaces or creates fake storefronts, then uses stolen credit card information to purchase products in bulk from legitimate vendors.
These goods are shipped directly to the unsuspecting buyers who placed orders with the fraudster. The attacker pockets the money paid by the buyer while the legitimate B2B merchant suffers the financial loss when the stolen card is reported and chargebacks are filed.
Yes, phishing scams are a type of B2B fraud where attackers impersonate vendors, partners, executives, or even IT departments to deceive employees into taking harmful actions. The scams typically trick employees into revealing login credentials, authorizing fraudulent payments, or downloading malware without realizing the danger until significant damage has been done.
Business Email Compromise (BEC) is the number one tactic to counteract fraud/potential fraud attempts, according to the Association for Financial Professionals.