Why Businesses Believe GenAI is to Blame for Fraud Surge

As two-thirds of businesses (62%) cite Gen AI as a key driver behind the surge in invoice fraud, according to a new global survey. It has led to an increase in difficulty when distinguishing between legitimate and fraudulent documents, as the attacks have grown both in volume and sophistication.

Alongside, 90% of organisations are lacking a dedicated fraud prevention team, which is forcing accounting staff to juggle fraud management along with their responsibilities – which often strains resources and increases vulnerability.

This was uncovered by invoice automation company Basware's 'The Rise in AP Fraud' report, conducted by sharedserviceslink. The study surveyed 100 global business leaders and CFOs on the exposure companies have to financial fraud and what protection measures they have in place.

Fraud is a global US$485bn issue

Fraud is increasing in frequency, sophistication and damage for the businesses on the receiving end. In 2024 seven out of 10 organisations (68%) reported fraud attempts, with 62% noting these attempts got worse over the past year.

It is leading to a staggering financial impact, as last year, fraud schemes, including bank fraud, resulted in global losses of US$485bn.

Remote work and decentralised operations are being viewed as key contributors of this surge, as identified by a quarter (25%) of respondents. By weakening internal controls, remote work exposes accounts payable (AP) departments to greater vulnerability, making it more difficult to prevent fraudulent activities.

At the same time, roughly a quarter of respondents point to rising transaction volumes (29%) and the expansion of the supplier base (25%) as critical risk factors. With more invoices to process and a larger number of suppliers to manage, AP teams face greater complexity, which increases the likelihood of errors or fraud.

Alongside these external threats, it creates a perfect storm of challenges, making it easier for fraudsters to exploit weaknesses in the AP workflow.

GenAI creating millions of illegitimate invoices

(AP) departments are increasingly on the frontlines of fraud detection, while simultaneously managing supplier payments. This dual responsibility is leaving them overwhelmed by the growing complexity and volume of fraudulent attempts.

As the tactics are sophisticated, with the use of fake invoices, deepfake and phishing scams, driven by Gen AI, means these attacks are more convincing and harder to detect. Subsequently, two-thirds (62%) of businesses now cite Gen AI as a key driver behind the surge in AP fraud.

With instruments like ChatGPT enabling the mass creation of communications and fake invoices, increasing risks and delays in resolving legitimate disputes. When handled by multiple disconnected systems, information becomes fragmented, making patterns harder to spot and allowing fraud to slip through undetected.

A high-impact case of AP fraud involved a man from Lithuania, who defrauded Facebook and Google out of more than US$120M by posing as a legitimate supplier. Using fake invoices, he secured US$99M from Facebook and US$23M million from Google. The fraud highlighted how vendor impersonation and fake invoices can cause massive financial losses without robust AP safeguards, even for large enterprises.

According to the survey, 90% of organisations lack dedicated fraud prevention teams, causing understaffed and under-resourced AP teams to prioritise speed over detailed checks, creating vulnerabilities. Meanwhile, reliance on paper-based processes and inadequate statement reconciliation leaves teams exposed to errors, inefficiencies and fraudulent activities.

Tom Santacroce, Global VP of AP Assurance, says: "Manual processes are inherently slow and prone to errors, making it difficult to match invoices, track approvals or identify duplicate payments – creating exploitable gaps for fraudsters, who are now using GenAI.

"For overburdened AP teams, these create the perfect storm of challenges, leading to operational bottlenecks, strained supplier relationships and lost cash flow.

"Forward-thinking organisations are reimagining fraud, overpayment and risk prevention through AI and automation that protects against increasingly complex financial threats. Remote work has weakened traditional security, requiring secure systems and innovative solutions like decentralised finance and blockchain for transparent vendor transactions. With increasingly sophisticated fraud tactics on the uptick, organisations must prepare for stricter AI and compliance rules. Proactive fraud prevention today not only mitigates risk, but also future-proofs operations against costly penalties."

How can enterprises combat fraud

AP fraud is one of the most targeted types of fraud for businesses. According to the survey, 28% of organisations cite a lack of AP automation to help tackle fraud. Reliance on manual processes and outdated tools leaves businesses ill-equipped to manage complex, high-volume transactions, creating critical gaps for fraudsters to exploit.

One example of how automation has strengthened AP fraud prevention is KION, a global leader in forklift trucks and warehouse equipment, who were previously vulnerable to fraud risks due to manual invoice processing.

To address these challenges, KION partnered with Basware, shifting to automated AP processes driven by AI that significantly reduced manual errors and minimised fraud opportunities. With more than 90% of its spend now controlled, KION has streamlined its operations, providing better visibility, control and oversight — ensuring that invoices and payments are accurately validated, reducing the risk of errors or AP fraud.

Explore the latest edition of Procurement Magazine and be part of the conversation at our global conference series, Procurement & Supply Chain LIVE.

Discover all our upcoming events and secure your tickets today.

Procurement Magazine is a BizClik brand