Intense economic pressure and high inflation are coming around the corner after the COVID-19 pandemic, war, and other economic issues.

While this certainly has an effect on conducting business, such as increasing the cost of goods and services, overhead, and affecting profits, there is another issue to face. Economic uncertainty is a hotbed for fraud and financial crime. 

Anxieties, vulnerabilities, and weaker controls provide fraudsters with plenty of opportunities, and businesses must strengthen their fraud controls They especially need to protect against the most common types of fraud schemes during a recession.

The Top 3 Types of Fraud During a Recession

Supply Chain Fraud

As best-in-class businesses re-engineer their supply chain, ‘near-shore’ their procurement of materials and services, and outsource their non-core functions to third-party specialists to cut costs and improve productivity, many new opportunities for fraudsters appear. Malicious vendors may submit fake bank account information, use defunct or fake tax identification numbers, use incorrect operating addresses, or worse, they could be a front for money laundering or terrorist financing.

One type of supply chain fraud, invoice fraud, targets accounts payable departments by invoicing for already purchased items or goods/services that have not been delivered. Another method fraudsters use is to submit bank account change requests via email, using a spoofed message appearing to be from a legitimate vendor or company executive. Often, departments accept this request, believing the sender to be legitimate, and pay the fraudster. 

Insider Threats

Typically, insider threats emerge from three motivations: intentional fraud, negligence, and waste/abuse.

In the case of intentional fraud, even ethical staff members succumb to the temptation to turn to fraud if there is enough financial stress and opportunities to commit fraud are immediately present. Some common intentional fraud methods include false or exaggerated expense claims, misdirecting customer, payroll, or vendor payments, and larceny, whether cash, disbursements, inventory, or other assets.

Negligence rises significantly in recessions, with remaining employees having to work extra hours to compensate for fewer overall staff members. Unfortunately, while focusing on their increased workload, employees may let their guard down in a phishing or social engineering scheme. As a result, they inadvertently compromise a company’s internal systems, controls, and payments. 

Waste and abuse typically manifest as thoughtless or careless expenditures, mismanagement, or improper use of resources to the company’s detriment. As companies experiment with work-from-home, ensure that prior controls related to insider threats are applied to workers no matter where they are.

Account Takeover

Fraudsters take control of digital accounts using stolen information, often obtained through phishing schemes or purchased off the dark web. While in the account, they change details, capture payment details and other identifying information, and make purchases under the account holder’s name. Any account is vulnerable to this attack, including business emails and login credentials for various company tools or customer accounts – and if your IT team is compromised, you could see even greater damage done.

Protect Against These Types of Fraud with AI

These 3 types of fraud, among many others, can be quickly and effectively mitigated using artificial intelligence-powered fraud prevention tools. With AI and Machine Learning, you can accurately risk-score transactions, applications, vendors, and other counterparties to reduce your exposure and review time, lightening the load on your fraud management teams. 

AI-based fraud prevention tools can save you time and money, freeing your business to pursue revenue-generating activities and innovating your products and services. 

Combat Procurement Fraud with a Know-Your-Vendor Solution

A secure and efficient vendor procurement process can be instrumental in stopping supply chain issues and insider threats.’s ‘Know-Your-Vendor’ (KYV) and ‘Know-Your-Business’ (KYB) solutions leverage Application AI to help streamline the procurement process with one-click vendor verification.’s KYV process consists of 5 steps:

  1. Initial gathering of supplier information, including bank account, tax identification number (TIN), address, and other fundamental data elements.
  2. Corporate (or individual) identity verification (TIN, SSN, and other identity and formation checks)
  3. Verification of bank accounts and proof of address, including confirming any commercial addresses provided by a vendor.
  4. Review of high-risk individuals (SDNs) and country sanctions lists associated with the vendor and its beneficial owners.
  5. Review of fraud, anti-money laundering, anti-terrorism funding, other regulatory alerts, and other domestic and international criminal screens.

From mitigating the potential risk of engaging with a supplier to catching existing instances of fraud, your exposure is significantly reduced. With’s KYV, you can operate with the knowledge that your third-party vendors remain trustworthy, despite economic pressures.

Protect Your Business with’s no-code/low-code platform makes it easy to try and easy to use, and we can have a typical enterprise customer live with less than a day of programming, realizing value within 30 days.

You can isolate and investigate high-risk transactions, applications, customers, and counterparties, even if your organization has never encountered that particular entity or fraud vector. 

Want to learn more about how your business can prevent the types of fraud that result from inflation, recession, and war? Download our free eBook: How Do Recessions, Inflation, And War Impact Fraud. Or, request a demo with our solutions consultants today to learn how AI can help you stop fraudsters in their tracks.