8 Types of Fraud Employers Must Recognise

• Fraud can take many forms in the workplace, from fake suppliers and staff misuse of company funds to phishing and telecommunication scams.
• Employers face legal and reputational risks if they do not check suppliers carefully, monitor expenses or maintain proper financial controls.
• Training frontline staff to recognise red flags and follow clear reporting procedures gives organisations a vital first layer of protection.

Fraud is the most widespread crime in England and Wales, with more than four million incidents recorded each year. Yet these figures understate the real scale of risk organisations face.

Research shows that many businesses choose not to report incidents, so the most common crime in England and Wales is actually more common than the official figures suggest.

You and your staff must be able to recognise the inconsistencies and odd behaviours that indicate fraud. When staff are alert to warning signs, most scams can be stopped before your money or reputation is lost. Raising awareness also helps deter internal fraud, as staff will be more likely to notice colleagues bending or breaking rules for personal gain.

The Economic Crime and Corporate Transparency Act (ECCTA) has also introduced a new corporate offence, the Failure to Prevent Fraud.

Now, large organisations can be found liable if an employee, contractor or associated person commits fraud that benefits the organisation, regardless of knowledge or involvement. The only way to avoid liability is to prove that reasonable steps have been taken to prevent fraud.

Building fraud awareness across your workforce is essential, as spotting early indicators is the most effective way to stop fraud before it happens. Every scheme leaves patterns that reveal how and where controls can fail, and recognising these warning signs is what keeps those risks contained.

Phishing is one of the most common ways criminals gain access to company systems.

It involves fake emails or messages that appear to come from trusted contacts such as senior staff, suppliers or banks. They’re designed to trick employees into sharing passwords, payment details or other confidential information.

Phishing is so successful because fake messages can easily be made to look convincing. They also exploit time pressure and our tendency to comply with authority figures. Be alert to:

• Emails from a “supplier” requesting urgent payment to new bank details
• Messages pretending to be from IT support asking users to reset passwords
• Attachments disguised as invoices that install malicious software when opened

Telecoms fraud can lead to unexpected bills running into thousands of pounds and may also expose sensitive information if attackers intercept calls or messages. These schemes exploit business phone or messaging systems, often going unnoticed until the next billing cycle.

The main risks include:

• SIM-swap attacks, where criminals transfer a company number to a new SIM to intercept calls, texts and security codes
• Premium-rate fraud, where company phones are used to make high-cost calls to numbers controlled by fraudsters
• International call spoofing, where criminals alter caller IDs to make fraudulent calls appear legitimate

Identity fraud occurs when criminals access company funds, data, or systems by impersonating employees, suppliers or other trusted organisations. They often use stolen or publicly available information to appear credible.

This type of fraud depends on weak verification controls. It includes scams such as:

• Fraudsters copying a company’s branding to send fake invoices to customers
• Criminals posing as suppliers and requesting payment detail changes
• Attackers using stolen employee credentials to log into secure systems

Payroll fraud happens when someone alters pay or employment records to take money they’re not entitled to. It can go unnoticed if payroll is trusted and processed routinely – a situation fraudsters take advantage of to:

• Add fake or “ghost” employees to the payroll
• Inflate pay rates, overtime, or bonuses
• Redirect wages to different bank accounts

Customer fraud happens when individuals exploit sales or returns processes for financial gain. It can take the form of:

• False refund requests
• Returning used or damaged goods as new
• Claiming that items were never delivered

In some cases, employees knowingly allow customer fraud to happen because they’re afraid to confront or challenge scammers. Other times, they receive a share of the illicit gains.

Expense fraud describes employees claiming money back for fake or personal expenses. These claims typically start small, but add up over time.

It’s most likely to happen when managers are overly trusting or inconsistent in their expense reviews. Be wary of employees:

• Claiming personal spending as a work expense
• Submitting the same receipt twice or changing receipt details
• Rounding up mileage or meal costs

Procurement and supplier fraud happen when purchasing or contract processes are manipulated for personal gain. It can be carried out by employees, suppliers or both.

These schemes exploit gaps in oversight and supplier management, often involving:

• Colluding with suppliers to fix prices or bids
• Accepting gifts, payments or favours in return for awarding contracts
• Submitting or approving false or inflated invoices

Data manipulation happens when employees alter or hide information to cover mistakes or gain benefits. It damages the accuracy of reports and can lead to legal or regulatory action.

It’s most often seen when performance pressure or fear of blame outweighs transparency, such as:

• Editing safety or compliance records to hide issues
• Altering financial results to meet targets
• Destroying or backdating records to mislead auditors

Frontline employees are often the first to notice suspicious payments, invoices or customer requests. Giving them targeted fraud awareness training helps turn routine checks into early warnings.

Our CPD-certified Fraud Prevention Training helps employees recognise how fraud happens, identify warning signs and respond appropriately when something seems off.

For large organisations, completing this training helps demonstrate that reasonable prevention procedures are in place. For smaller businesses, it builds a workforce capable of detecting and reporting suspicious activity early, often preventing losses that policies or audits alone might miss.

In both cases, trained staff strengthen day-to-day controls and protect the organisation’s financial and reputational integrity.