How to Spot and Avoid Fake Vendor Invoices and Gift Card Fraud This Holiday Season

The holiday season brings increased business activity, celebrations and year-end deadlines. It also marks peak opportunity for scammers. As companies focus on hitting targets and managing festivities, cybercriminals take advantage of urgency and distraction to carry out some of their most profitable schemes including fake vendor invoices and gift card fraud.

In 2024, the FBI’s Internet Crime Complaint Center (IC3) reported over $16 billion in losses from internet crimes and highlighted the real risk to businesses of all sizes. Staying protected requires a mix of vigilance, clear protocols and a strong culture of security throughout your organization.

Understanding the Double Holiday Threat

Two holiday scams that frequently target businesses are fake vendor invoices and fraudulent gift card requests. These tactics can be used separately or together. In a fake vendor invoice scam, a fraudster impersonates a legitimate vendor either by hijacking their email account or spoofing a nearly identical address and sends a convincing but fraudulent invoice requesting payment.

In a gift card request scam, an employee receives an email that appears to come from the CEO, CFO or another executive and instructs them to purchase multiple gift cards for “employee rewards” or “client gifts.” The employee is then asked to immediately send the card numbers and PINs back to the “executive” who is actually the scammer. These attacks exploit trust, authority and the year-end pressure to act quickly and often target staff in HR, finance or administrative roles who are responsible for employee recognition programs or holiday bonuses. Scammers count on these employees wanting to follow company traditions or meet executive requests to make the scam feel urgent and legitimate. Awareness and clear verification procedures are essential to prevent falling victim to these schemes.

Decoding the Red Flags in Phishing Emails

A critical first line of defense is knowing how to spot a phishing attempt. Train employees to approach every email with caution and especially messages asking for payments or the purchase of gift cards. Key warning signs to watch for include:

• Emails with a sense of extreme urgency or secrecy that pressure the recipient to bypass normal procedure.
• Grammar and spelling errors like subtle misspellings in the sender’s email address (e.g., john.ceo@yourcompany-llc.com instead of john.ceo@yourcompany.com). Tip: Hover over the links to see if the destination URL seems suspicious.
• Generic greetings such as “Dear Accountant” instead of addressing the recipient by their actual name.
• The nature of the request: Requests for gift cards with instructions to share numbers and PINs are a common tactic in gift card fraud. For invoice or payment requests, always confirm changes to payment details through a separate and trusted communication channel.

Creating Clear Rules for Safe Payments

Technology alone isn’t enough to stop these scams. A strong financial fraud prevention policy with clear payment rules that everyone handling finances follows consistently is essential. The good news is that putting simple and practical steps in place can make your business much harder to target. Here is a step-by-step approach to help protect your company from and invoice and gift card fraud this holiday season:

Start by creating a clear verification process for all payment requests and changes to vendor information. Any request (whether it is from an executive asking for a purchase or a vendor updating banking details) should be confirmed through a trusted channel like calling a known phone number on file rather than relying on the contact in the email. For instance, if an email appears to come from the CEO asking for gift card purchases, the rule is simple: Always pick up the phone and verify the request directly with the executive.

Set a policy requiring dual approval for all invoices above a specified amount. At the same time, separate responsibilities so that the person approving payments isn’t the same individual who enters vendor information. These steps aren’t exhaustive but they add the right checks and balances to help prevent fraudulent transactions before they happen.

Fortifying Your Defenses Beyond the Basics

Technology can play a key supporting role in your fraud prevention strategy. Use the built-in security features in your accounting software to flag invoices from new vendors or duplicate payment amounts. Additionally, enable multi-factor authentication (MFA) on all email and financial accounts to make it harder for attackers to hijack an executive’s email and send fraudulent payment requests.

Make security training an ongoing effort rather than a once-a-year event. Regular refresher sessions combined with mock phishing and fake vendor email drills focused on invoice and gift card fraud help test your team’s readiness. This keeps security top of mind during busy periods like the holiday season when employees are most at risk.

Ultimately, the aim isn’t to slow down your business with unnecessary bureaucracy. It is to put sensible safeguards in place that protect against financial fraud. A quick verification call or a few minutes spent following procedure is far less costly than the financial and reputational damage of a fraud incident. By combining clear policies, ongoing security training and effective technology controls, your company can navigate the holiday season confidently without falling victim to scams.

Do not let the holiday chaos compromise your bottom line. Contact Sound Computers today to review your security practices. Our experts will help you review your financial protocols and controls, implement effective employee training and ensure that you have the necessary technology controls to support your fraud prevention goals. 

Article FAQs

What is the most common sign of a fake invoice or gift card scam?

Urgency is a major red flag. Scammers create false deadlines to pressure employees into bypassing normal approval processes and skipping verification steps.

How should an employee verify a suspicious request from their boss?

Never reply directly to the suspicious email. Instead, confirm the request using a trusted channel such as calling the executive’s direct line or speaking to them in person.

Can good email security stop these scams?

Not entirely. Strong email security and multi-factor authentication (MFA) help prevent account takeovers but many scams come from look-alike external domains. Human verification and adherence to clear policies remain essential.

What should we do if we think we paid a fake invoice?

Contact your bank immediately to attempt to recall the payment. File a report with the FBI’s Internet Crime Complaint Center (IC3) and notify your internal IT or security team to investigate and prevent further incidents.

Are small businesses at risk for these scams?

Absolutely. Small and medium-sized businesses are often prime targets due to limited financial controls, less robust security measures and employees juggling multiple roles which makes them more susceptible to social engineering attacks.