Ghost Vendor Fraud

How does ghost vendor fraud work?

Ghost vendor fraud usually starts on the inside. Someone with access to the vendor master file adds a fake or shell supplier, then raises invoices against it for goods or services that are never delivered. Because the vendor exists in the system and the invoices look routine, the payments clear without suspicion. A familiar Australian example: an employee sets up a supplier with a plausible name and a valid-looking bank account, then approves modest invoices over many months, drawing steady payments to an account they control. The absence of any real delivery is easy to overlook when purchase orders and approvals appear complete.

Why it matters for Australian finance teams

Ghost vendors are among the most damaging forms of procurement and insider fraud because they blend into legitimate spend and can persist for years. Australian guidance from bodies such as the Australian Institute of Criminology highlights fictitious supplier schemes as a recurring driver of internal fraud losses. For finance teams, the exposure is ongoing: a ghost vendor keeps drawing money until a review or reconciliation exposes the gap between payments and delivered value.

How ezyshield helps

ezyshield makes it harder to onboard and pay a supplier that is not genuine by confirming the person, the business through ABN and ASIC records, and bank account ownership before money moves. A shell entity that cannot prove it is a real, registered business owning the nominated account fails verification. ezyshield is not a full vendor management system, but every check it runs is written to an append-only audit trail that is logged and never deleted. See how it works and Know Your Business (KYB) in Australia.