Fraud Trends in 2025: Paying Out Your Contractors

Fraud Trends in 2025: Paying Out Your Contractors

As a business, hiring contractors is a stellar way to bring in specialized skills, tap into a much larger pool of talented workers, and save money. Great for growing companies or businesses looking to start unique projects, contractors bring so much to the table. Best of all, working with contractors gives businesses like yours the utmost flexibility. With a great payout platform like Dots, you can hire contractors worldwide and pay them on their terms with no issue.

Whether you hire a handful of independent contractors or hundreds, it's vital to understand your risk of fraud. As a business that pays contractors, you are a target for criminals looking to exploit even the smallest vulnerability in your payout processes. Fraud continues to be a substantial concern in every industry, and many experts warn that things are evolving faster than most realize. With AI, automation and advanced technology at their fingertips, scammers are capitalizing on ignorance to steal billions!

In this blog, we'll discuss emerging fraud trends impacting businesses in 2025, covering tactics you should be aware of and providing tips on staying safe.

What’s Changing in Contractor Payouts - and Why You Should Care

In 2025, contractor payouts will become more prevalent and sophisticated. The number of individuals accepting work on a freelance basis will continue to grow. The latest surveys suggest that over 76 million people worked as independent contractors, either full-time or occasionally, in the United States in 2024. That number will likely climb, with some projections estimating that over half of the American workforce will take on freelance work to some degree by 2028.

With more and more businesses hiring contractors, payout processes are evolving. Many companies are adopting more robust systems to handle payouts in 2025. Faster and more flexible options are also gaining prevalence. For instance, some companies pay contractors via real-time payments, transferring funds almost instantly to recipients. Others are using payout links to send payments without onboarding or manual transfers.

Contractor payouts continue to evolve. Why should you care? Not only should you stay current to understand contractor expectations and preferences, but you should also stay in the loop to remain aware of your fraud risks. Bad actors follow trends to adapt their fraud strategies. Staying informed can help you be proactive about combating fraud to protect your business and contractors.

Fraudsters attack innocent businesses and payout recipients in many ways. Let's examine emerging fraud trends, including mandate fraud, platform manipulation, and more.

Verification Targeting Scams

Identity verification is crucial for businesses sending payouts, and it's one of the many ways to ensure you're sending funds to the right person. While simple verification methods made a big difference in the past, fraudsters are catching on. Verification targeting is a scheme that aims to exploit verification processes.

This form of fraud is strategic. Criminals target vulnerable individuals, often looking for victims on marketplaces or social media. They may pose as buyers or friendly neighbors, requesting that targets verify their identification using platforms like Google Voice. They convince targets to share verification codes through social engineering tactics and deception.

Once that happens, scammers can use verification codes to create Google Voice numbers linked to the victim's real number. That's when the real fraud can occur. When a criminal creates a fake number tied to a real one, they can wreak havoc in many ways, including committing payout fraud to steal funds.

Platform Manipulation by Fake Contractors

Here's one of the ugliest fraud trends you need to look out for in 2025. While you might go to great lengths to hire qualified contractors, you can inadvertently invite fraudsters in. Many criminals go to great lengths to get hired for jobs, even if they have no intention of delivering. The goal here is to gain access to your platform so that they can disrupt the system and steal funds.

Bad actors can manipulate a system in several ways. Once successfully onboarded, they will have the same capabilities as real contractors. As a result, they have the power to produce spam, provide inauthentic engagement, submit fake work, etc. Some tech-savvy fraudsters will use automation and AI to ruin your platform and steal money every step of the way.

Mandate Fraud

Mandate fraud directly affects your contractors. After hiring talented workers, they go through the onboarding process and provide financial data for payments. Bad actors take advantage of the trust that targets place in your company. They pose as legitimate organizations to deceive contractors, convincing them to change bank or payment details.

The goal is to get contractors to send payouts to a fraudulent account. Because scammers impersonate employees of your business, they can easily fall prey to the scam.

Inside Jobs and Contractor Collusion

Here's one of many trends focusing on what's possible when contractors develop internal plans to defraud your company. Contractor collusion occurs when two or more contractors you hire work together to manipulate the bidding system or change the payout process. This fraud aims to rig the game, inflate prices, and force you to pay more.

It's an inside job, and many scammers get into your system legitimately. After earning your trust, they begin to collude and harm your business.

Global Payout Fraud Through Shell Entities

Hiring global contractors is a game-changer for businesses in many industries. It's an opportunity to get a fresh perspective, work with talented people worldwide, and control your hiring budget. With a platform like Dots, you can easily pay international contractors while staying compliant. 

However, there is a risk of global payout fraud. Scammers can create shell companies. They pretend to be legitimate contractors, suppliers, or vendors. Once they have gained your trust, they may submit fake or inflated invoices to extract as much money from your organization as possible. Because they use an international shell company, they can easily direct funds and launder payouts to stay hidden. The shell company shields the true identity of scammers and masks fraudulent activity, allowing it to continue long before anyone raises a red flag.

How Dots Can Help

Dots is a purpose-built unified payout platform to help you combat fraud. Bad actors can attack your business in many ways, and Dots empowers you to manage your risks more effectively. 

The Dots API has comprehensive fraud management and detection features. A thorough onboarding process makes performing due diligence and identity verification a breeze. Meanwhile, algorithmic fraud detection and ongoing monitoring keep an eye out for suspicious activity. If Dots detects anything sketchy, you get alerted to take action. Whether you want to send payouts to contractors regularly or use a secure payout link, Dots has you covered.

Get Started With Dots Today!

Don't let your business or contractors become victims of these fraud trends. Criminals are becoming wiser, but the right tools and processes can help you stay one step ahead. With holistic fraud management, comprehensive security features, and flexible payout link options, Dots is the ultimate payout platform for businesses working with independent contractors. In addition to helping you streamline your entire approach to paying contractors worldwide, Dots covers your bases to safeguard your bottom line, data and users.

Schedule your demo today to learn more about Dots and how it protects companies like yours from fraudsters!