The Most Common Cyber Attacks and Fraud Schemes

Fraudsters and cybercriminals are becoming increasingly sophisticated, using deceptive tactics to infiltrate hospitality businesses, manipulate AP processes, and siphon off company funds. 

• Business Email Compromise (BEC).  Cybercriminals may impersonate a trusted vendor, executive, or employee using a seemingly legitimate email address to trick AP teams into making fraudulent payments.  These emails often contain urgent language, pressuring staff to bypass standard verification processes.  Because BEC scams mimic real communication patterns, they can be difficult to detect until a payment has already been processed.

• Vendor fraud.  Fraudsters may pose as legitimate suppliers and submit fake invoices or request changes to bank account details.  Since hospitality businesses work with multiple vendors for housekeeping, food supply, and maintenance, it can be challenging to spot fraudulent requests amid the volume of transactions.  If fraudulent payments are processed, companies may struggle to recover the lost funds, damaging relationships with real vendors.

• Check fraud.  Paper checks are still widely used in the hospitality industry, making businesses vulnerable to forgery, counterfeiting, and theft.  Fraudsters can intercept checks in transit, alter payee information, or duplicate checks to divert funds.  Unlike digital payments, which have built-in tracking mechanisms, check fraud often goes unnoticed until a vendor reports a missing payment, or an unauthorized withdrawal appears in bank records.

• Phishing attacks.  Phishing scams use fraudulent emails to trick employees into revealing sensitive information, such as login credentials or banking details.  These attacks often appear as routine requests from IT departments, banks, or vendors, making them difficult for employees to recognize.  If an employee provides access, fraudsters can infiltrate financial systems, reroute payments, or install malware that compromises company data.

• Ransomware attacks.  In a ransomware attack, cybercriminals encrypt company data and demand payment in exchange for restoring access.  Hospitality businesses are particularly vulnerable because losing access to reservations, payment records, and vendor contracts can bring operations to a halt.  Paying the ransom does not guarantee data recovery, and companies that comply with demands may become repeat targets for future attacks.

Understanding these attack methods is the first step toward protecting your business.  Because if you don’t have safeguards in place, it’s only a matter of time before your company will be targeted.

How Conventional AP Approaches Create Vulnerabilities

Outdated AP processes are a goldmine for fraudsters, creating weak points that they can exploit to siphon funds, manipulate payments, and cripple businesses before anyone realizes what’s happened.

• Manual invoice processing.  Many hospitality businesses still rely on paper invoices and email-based invoice approvals, creating opportunities for fraudsters to submit fake invoices and infiltrate approval processes.  Without automated validation, AP staff may process duplicate payments or pay invoices for services never rendered.  Manual processes also slow down reconciliation, creating more opportunities for fraudsters to commit crimes undetected.

• Lack of bank account ownership verification.  Vendor payment fraud often occurs when a fraudster successfully tricks AP or procurement staff into updating bank account details to redirect funds.  Without a robust bank account ownership verification process, businesses risk sending large payments to unauthorized accounts.  Once the funds are transferred, recovering them is nearly impossible, leaving the hospitality business at a significant financial loss. 

• Weak approval workflows.  Many AP departments still use informal approval processes, such as email confirmations or verbal approvals, which can be easily manipulated by fraudsters.  Staff may approve payments without thoroughly verifying invoice legitimacy, increasing the risk of fraudulent transactions.  Weak approval workflows also make it difficult to track who authorized payment, making audits and fraud investigations hard.

• Dependence on paper checks.  Paper checks remain a top payment method in hospitality, despite being one of the most vulnerable to fraud.  Check fraud schemes, such as forgery and alteration, can go undetected for weeks, leading to unauthorized withdrawals.  Checks also can be intercepted in transit, delaying vendor payments and straining supplier relationships.

• Limited visibility.  Many hospitality companies lack real-time financial tracking, making it difficult to spot irregularities.  When fraud detection relies on periodic audits rather than continuous monitoring, fraudulent payments may not be identified until significant losses have occurred.  Limited reporting capabilities also prevent AP teams from recognizing suspicious patterns, such as multiple payments to the same vendor within a short period.

Without modern safeguards, these vulnerabilities leave a hospitality company exposed – turning AP from a routine financial function into an open door for fraud, financial loss, and operational chaos.

Best Practices for Mitigating Cyber Attacks and Payment Fraud

The best defense against cyberattacks and payment fraud isn’t hoping you won’t be targeted.  It is proactively fortifying your processes with automation, tighter controls, and security training.

1. Automate AP processes.  Automated invoice processing eliminates manual errors and reduces the likelihood of fraudulent invoices being paid.  These systems provide automated approvals, enforce compliance with spending policies, and flag suspicious transactions in real time.  AI-driven fraud detection tools analyze invoice and payment patterns to detect changes in the average invoice amount and other anomalies and prevent unauthorized transactions.

2. Strengthen vendor verification.  Hospitality companies should build vendor verification directly into their payment process.  Bank account ownership verification, for example, ensures that payments are only made to legitimate suppliers, reducing the risk of fraudulent account changes.  Multi-step authentication for updates to vendor bank accounts provides an additional safeguard, ensuring that changes are verified before funds are transferred.

3. Enhance payment security.  Hospitality businesses must transition from paper checks to secure electronic payments such as ACH, virtual cards, ghost cards, and network payments.   Virtual cards, the most secure payment method, generate unique, one-time-use numbers, reducing the risk of fraud and unauthorized transactions.  Secure payment tokenization and encryption prevent sensitive financial information from being exposed to cybercriminals.

4. Educate and train employees.  Regular training on phishing attacks, BEC, and social engineering scams helps employees recognize and report suspicious activity.  Companies can also implement automated fraud prevention prompts that require employees to verify high-value payment requests before processing.  For instance, some financial management platforms provide built-in security alerts and fraud awareness training modules for staff.

5. Strengthen internal controls.  It’s imperative that no single employee has unrestricted control over payments.  Dual-approval workflows require multiple levels of authorization for high-value transactions, reducing the risk of unauthorized payments.  Additionally, real-time access logs help monitor user activity and detect suspicious behavior before fraud occurs. 

6. Monitor and audit AP transactions.  Real-time transaction monitoring in a financial management system provides continuous oversight of financial activity.  Automated reporting tools detect unusual payment trends, such as duplicate transactions or payments just below approval thresholds.  Periodic system-generated audits help finance teams identify inconsistencies in vendor payment histories, allowing for immediate corrective action. 

7. Prepare a response plan.  Incident response protocols make it easier for AP teams to take immediate action in the event of fraud.  Having a well-documented fraud response plan ensures that hospitality businesses can act quickly to contain and mitigate financial losses. 

By modernizing AP operations, embedding security into every transaction, and equipping their team with the right tools and training, hospitality companies can mitigate their payment fraud risk.

Conclusion

With cyber threats and payment fraud risks escalating, hospitality businesses can no longer afford to rely on outdated AP processes that leave them vulnerable to financial losses, operational disruptions, and reputational damage.  A single fraudulent transaction or security breach can drain company funds, delay vendor payments, trigger compliance violations, and erode guest trust – consequences that can take years to recover from.  By automating workflows, enforcing internal controls, and leveraging integrated fraud prevention tools, hospitality companies can safeguard their financial assets, prevent attacks, and ensure business continuity in an increasingly high-risk digital landscape.