How Social-Engineering Fraudsters Are Targeting Supply Chains

Manufacturing has recently undergone a huge shift from analog processes to advanced automation. Teams now rely on enterprise resource planning systems, procurement platforms, supplier portals and automated payment workflows. But while automation has solved many efficiency challenges, it has also changed how fraud works. 

Fraudsters no longer need to hack into systems. They simply mimic trusted business processes, allowing fraudulent payments to move through workflows unnoticed. In fact, data found that 92% of attacks impersonate trusted vendors or executives, with 59% using multiple tactics to enhance legitimacy. A single fraudulent payment can delay critical suppliers, stall production lines and create costly downtime across the manufacturing operation. 

While automation is essential for keeping pace with supply chain demands, verification processes must evolve alongside it to prevent fraud and costly downtime.

Manufacturing inherently works across large, frequently global ecosystems. Teams balance a mix of suppliers, logistics partners and distributors. With each new vendor or team that’s added into this ecosystem, a new relationship is created. For years, these relationships have relied on trust between humans conducting business.  

As organizations become more interconnected than ever, they’ve created a supplier web. Fraudsters know this. As a result, they frequently target vendors that are part of these webs who may be easier to attack.  

A large-scale automotive manufacturer, for example, might have incredibly strong security controls. The issue is that vendors are still part of that interconnected web. Imagine that the manufacturer relies on a small supplier with fewer security resources. That’s exactly the type of vendor attackers target. If that supplier doesn’t get paid, critical parts don’t ship. From there, payment fraud quickly snowballs into more than a payment issue. 

While 78% of consumers say they’d be able to recognize fraud, 70% are still watching for the typos and bad grammar of yesterday’s phishing. Today, modern fraud looks legitimate.

Fraudsters have learned to mimic legitimate business activities to pass through systems undetected. Now, fraudsters send emails with AI-generated documents, including invoices, W-9s, bank statements or existing email threads. They may spend weeks inside a compromised vendor environment learning communication patterns before using AI to generate convincing documents that support their deception.

Thanks to automation, fewer people closely review emails, bank documents, invoices or account changes. This means that fraudsters are going undetected. Instead of being fooled by obvious scams, supply chain leaders are targeted by requests that look indistinguishable from normal business operations — until a supplier misses a shipment and production slows to a halt.

While manufacturing has embraced automation, many organizations still rely on legacy controls such as one-time vendor validation, static approval rules and bank account verification. These approaches were built for a different generation of fraud.  

Take, for instance, the Automated Clearinghouse Network. It was built in the 1970s, when typical bank account validation processes were to send micro deposits through the network to verify the account existed. Today, fraudsters routinely use legitimate bank accounts that pass these checks. 

In fact, ACH rules, governed in the U.S. by the Nacha organization, now require businesses to implement stronger, risk-based monitoring tactics to help detect deceptive ACH activity before payments are submitted. This means ACH originators are now on the hook to catch fraudsters.

With this in mind, vendor trust can no longer be a one-and-done effort that’s checked off during onboarding. Vendors might be legitimate when a contract is first signed, but between every transaction, there’s opportune space for a fraudster to hijack business processes. 

In manufacturing, every payment is connected to a physical outcome. If the wrong account gets paid, materials might never leave the supplier’s dock. One compromised payment can ripple across production schedules long before anyone realizes fraud occurred. 

While Nacha’s ACH requirements are often viewed as a compliance exercise, manufacturers should see them as an operational resilience strategy. Every payment that reaches the right supplier helps keep production moving. For organizations needing a structured way to implement these changes, the following 10-step framework should be employed:  

Confirm all ACH use cases and systems. Manufacturers often operate across multiple ERPs, procurement systems, supplier portals, treasury platforms and payment tools. Before organizations can monitor fraud effectively, they need visibility into where payment instructions originate and where payments are executed. Visibility must be the first step ,because organizations can’t protect workflows they don’t fully understand.  

Assign clear owners across compliance, treasury, finance, security and operations. One of the biggest reasons fraud succeeds is because no single team sees the full picture. Frequently, different teams own just a portion of the payment lifecycle. Maybe procurement owns vendor onboarding; finance owns payment execution; IT manages platforms, and security oversees access controls. For each organization, they see just a small piece of a fraudster’s plan, meaning nothing ever looks suspicious enough to flag. Organizations need clear ownership and accountability across every stage of the payment lifecycle to close visibility gaps and better spot fraud.

Document current fraud monitoring processes. Organizations should have a clear understanding of their current processes. This means knowing how vendor changes are approved, who reviews payment requests, what happens if a vendor wants to change payment details, and if there’s any manual verification remaining. During this step, many manufacturers discover there are critical gaps in their existing processes where fraudsters can go undetected.

Build behavioral baselines for vendors, users, and payments. Traditional security controls ask, “Is this account valid?” Modern fraud requires a shift. Teams must now ask, “Does this activity make sense?” To catch fraudsters in the act, organizations need to understand what behavior is typical for each vendor. This means knowing their normal payment timing, approval patterns, invoice characteristics and communication habits. Even small changes could signal fraud, so having a baseline is critical to detecting anomalies. Increasingly, teams are turning to AI to help track these tedious changes and develop a baseline for each unique vendor.

Define anomaly rules around “false pretenses.” Nacha refers to socially engineered ACH fraud as payments induced through “false pretenses.” For manufacturers, it’s necessary to define which scenarios would flag a “false pretense” and trigger additional security. This could be a request to change vendor banking details, unusual invoice payments, urgent payment demands or simply requests that don’t match historical patterns.  

Implement pre-submission screening for outbound ACH payments. Fraud prevention can’t happen after a payment has already been authorized. Historically, this hasn’t always been the requirement, but now pre-origination screening intent is critical for any vendor supporting ACH payments. Organizations need to conduct a risk analysis before funds move, and this includes having a pre-submission screening.

Enable risk scoring and tiered review for high-risk transactions. Not every payment requires the same level of review. Manufacturers should determine which transactions pose the highest risk and prioritize accordingly. For many organizations, it will look like prioritizing a mix of new vendors, banking changes, large transactions, cross-border payments and those involving unusual behavior. Risk-based reviews allow organizations to remain efficient without creating bottlenecks for every single payment.  

Continuously monitor the entire payment lifecycle. Fraud doesn’t begin when a payment is submitted. In reality, a submitted payment is the last step of a fraudster’s plan. The entire payment lifecycle should encapsulate everything from vendor onboarding to supplier communications to the eventual payment execution. Organizations need to continuously monitor across the workflow rather than at isolated checkpoints. Some even lean on artificial intelligence agents during this process to do the heavy lifting and connect signals across email, ERP, banking, invoices and vendor records, providing a unified view of payment risk.  

Maintain audit trails for payment decisions. As part of Nacha’s ACH rule changes, it increasingly expects organizations to demonstrate how payment decisions are made. This means organizations must have strong audit trails to back up every payment. Manufacturers should maintain documented evidence of reviews, risk assessments, escalations, approvals and exceptions. With strong documentation, teams can be both compliant and prepared.  

Conduct annual fraud monitoring reviews. As AI tools grow in capabilities, fraud tactics will constantly evolve. Attackers are increasingly using layered tactics, trusted identities and legitimate-looking financial documentation to create convincing-looking attacks. Organizations should conduct annual reviews of vendor risk, current approval workflows, emerging fraud tactics and necessary automation controls to ensure they’re keeping pace with industry changes.  

Manufacturing has always measured success by uptime. As automation accelerates, maintaining that metric depends on something many organizations overlook: trusted payments.

A fraudulent payment can delay suppliers, idle production lines, disrupt customer commitments and ripple across the supply chain. The manufacturers that thrive will continuously verify trust so the right suppliers get paid, production keeps moving, and downtime never becomes the cost of a preventable fraud attack. 

Shai Gabay is a co-founder and chief executive officer of Trustmi,