The Impact of Disruptions on Fraud Vulnerabilities: Insights from Trustpair’s CEO

Earlier this year, the AWS outage not only highlighted technical flaws but also exposed vulnerabilities related to fraud. In this Q&A, Trustpair CEO and Co-Founder Baptiste Collot discusses how disruptions like outages and rapid supplier changes create fertile ground for fraudulent activities.

Understanding the Disruption-Distraction Cycle

Supply Chain 24/7: You’ve mentioned that disruption and distraction often lead to increased risks of fraud. Can you elaborate?

Baptiste Collot: The tariff fluctuations this year, such as the 145% on Chinese imports and 25% on automotive parts from Mexico and Canada, have caused significant upheaval. When manufacturers like Stellantis shut down operations, procurement teams rush to identify new vendors, which compromises vendor verification processes.

This rush often bypasses essential verification steps, leaving businesses wide open to fraud. Fraudsters strategically observe these disruptions, impersonating legitimate suppliers. In the chaos of managing operations, companies often overlook potential red flags that they would typically catch.

Vulnerability Factors During Quick Supply Chain Pivots

SC247: What makes companies especially susceptible to fraud during rapid pivoting in supply chains due to sanctions, outages, or trade shifts?

BC: Three main factors create ideal conditions for fraud during these pivots:

• Unfamiliar Vendor Geographies: Rapid nearshoring or sourcing from new regions exposes companies to unknown banking systems where fraud risks are highest.
• Unreliable Vendor Data: Under pressure, verification processes may be rushed or overlooked, especially with a reduced workforce. New employees often lack the experience to detect anomalies.
• Siloed Operations: During crises, communication between procurement, accounts payable, treasury, and risk departments often collapses, increasing opportunities for fraud.

Lessons from the AWS Outage

SC247: What does the AWS outage teach us about reliance on digital systems for vendor verification?

BC: The outage served as a reminder for the need for operational resilience. Businesses must be prepared with alternative verification methods even during system downtimes, ensuring that vendor data can still be validated.

Organizations should prioritize building a verification infrastructure that utilizes multiple independent data sources to ensure that fraud prevention measures remain intact, regardless of system outages.

AI’s Role in Fraud

SC247: How are fraudsters leveraging AI to their advantage, and how can businesses use automation to combat this threat?

BC: There has been a staggering 118% increase in the use of generative AI for fraud attempts. The sheer volume of attempts has escalated drastically — transitioning from a single incident per quarter to hundreds each month.

Fraudsters utilize AI for mass phishing campaigns and deepfake technologies. To counteract this, companies must implement automated account validation to quickly verify vendor data and monitor changes in real-time. Manual procedures simply cannot keep up with the speed at which AI-harnessed fraud operates.

Barriers to Automation

SC247: What prevents companies from adopting automated fraud prevention strategies?

BC: The issue isn’t technology; it’s prioritization. Many CFOs mistakenly believe that multiple approval layers suffice as a safeguard against fraud, creating a dangerous sense of security. In reality, such reliance on manual controls can create numerous loopholes.

Unfortunately, fraud prevention often takes a back seat to other initiatives until a substantial incident occurs, at which point the focus shifts dramatically. Companies must recognize that automation allows teams to concentrate on true risks rather than bogging them down with redundant verification tasks.

High-Risk Industries and Ongoing Threats

SC247: Which industries currently face the greatest risks from fraud?

BC: Any sector dealing with rapid supplier changes is at risk, particularly those with complex global supply chains that must quickly pivot. Companies that transition suppliers swiftly—especially under pressing circumstances like sanctions—are particularly vulnerable to fraud attempts.

The rapid pace of change, coupled with outdated manual verification processes, makes businesses easy targets for sophisticated fraud schemes. Modern fraudsters leverage advanced AI tools to fabricate documentation and create convincing fraudulent activities that traditional validation methods cannot effectively capture.

Creative Scams: The Real Threats

SC247: As a fraud prevention expert, what’s the most notable scam you’ve encountered?

BC: The scariest attempts are not necessarily the most creative; they exploit the innate human weaknesses tied to urgency and speed, especially during peak business cycles.

Recently, a higher education organization lost millions in a single fraudulent payment amidst their frantic end-of-week operations. Effective scams exploit timing, leveraging high-pressure situations when businesses are under the most stress.

This calls for systems that ensure robust, automated validation of vendor accounts. Relying solely on manual checks in an increasingly complex threat landscape simply isn’t sustainable.

Conclusion: Fraud prevention cannot merely rest on human input amidst rising threats; it requires a systematic and automated approach that keeps pace with the rapid advancements in fraudulent tactics.