Baltimore Loses Over $803,000 to Fraud Involving Vendor Payments

The City of Baltimore lost over $803,000 when a fraudster diverted two of the city’s electronic fund transfer (ETF) payments intended for a vendor to another bank account.

One payment valued at over $721,000 was retrieved by the city, while the other one valued at over $803,000 has not been recovered, the Office of the Inspector General of the City of Baltimore said in an investigative report synopsis released Wednesday (Aug. 27).

The OIG found that a fraudster gained access to the vendor’s account for the city’s procurement and supplier platform, changed the vendor’s bank to the fraudster’s bank on the platform, and received the two EFT payments from the city on Feb. 21 and March 10, according to the report.

“The investigation revealed a lack of internal policies and procedures in AP [the city’s Department of Accounts Payable] regarding supplier verification,” the report said.

According to the report, OIG recommended that AP create a list of authorized users for supplier accounts, provide staff with training in handling supplier bank information and recognizing signs of fraud, and develop policies that require immediate reporting of suspected fraud or theft to the AIG.

In an Office of the Comptroller response to the report, the department said it concurred with the OIG’s assessment of the incident.

Following the incident, it implemented reforms covering supplier contact and banking updates, safeguards for the procurement and supplier platform, and enhanced verification and oversight, according to the response.

“Our office will continue to evaluate opportunities for systemic improvement and share lessons learned with other City agencies as part of a broader risk management strategy,” the response said.

The PYMNTS Intelligence and Finexio collaboration “Winning the Fraud Fight: How AP Automation Can Deflect Rising Security Threats” found that accounts payable departments are increasingly vulnerable to fraud as cybercriminals attack more businesses.

According to the report, 96% of companies experienced at least one fraud attempt in 2024, up from 56% the previous year, with 94% reporting multiple attacks.

PYMNTS reported in September that fraudsters are capitalizing on the fact that the invoice, whether it’s digital or paper, represents one of a company’s most attractive attack surfaces.

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