Vendor Frauds
- 1. Billing Schemes -
- 2. Bribery and Kickbacks -
- 3. Overbilling -
- 4. Price Fixing -
An employee generates false payments to himself/herself using the company’s vendor payment system either by creating a fictitious vendor (shell company) or by manipulating the account of an existing vendor.
An employee participates in a bribery scheme when he or she accepts (or asks for) payments from a vendor in exchange for an advantage.
A vendor pads invoices to charge the company for more goods than it ships or to charge a higher price than agreed in collusion with an employee, who receives a kickback or by the vendor alone to defraud the company.
Competing vendors collude amongst themselves to set a minimum price or price range.This makes both vendors’ prices appear competitive and ensures the company pays an inflated price no matter which vendor is chosen.While employees of the company are not usually involved, they sometimes provide information to the vendors about pricing and budgets to facilitate this fraud.
