When it comes to fraud, there are no businesses exempt – not even small to medium-sized enterprises (SMEs). As technology advances, so do the threats and tactics used by individuals looking for any weaknesses they can exploit. Criminals are leveraging technology to be more strategic, more convincing and more difficult to detect.
The reality is that all businesses, regardless of size or industry, face exposure to fraud, and traditional risk management strategies are not enough to protect organisational interests.
SMEs should not think their businesses are not on the radar of fraudsters. In fact, sometimes the fraudster will target an SME because of weak internal security and a lack of risk mitigation methods.
Here, we look at the top 10 fraud trends set to affect all businesses in 2026.
Trends: Fraud to Expect in 2026
Here are some of the trends in fraud that all SMEs should be aware of in 2026.
1. Credit Application Fraud
Credit application fraud is already well known in South Africa, particularly among lenders, retailers, motor finance providers and businesses offering goods on account. It happens when individuals apply for credit using false personal information, manipulated payslips or identity details stolen from someone else.
Because of the improved access to editing software and extensive data breaches, fraudsters have found it easier to create documents that appear legitimate. Forecasts suggest this type of fraud will increase in 2026 as criminals refine document forging techniques and target companies with outdated vetting procedures.
The impact of credit application fraud is especially damaging for SMEs that operate within a thin margin of tolerance. A lack of robust background screening, affordability assessments, and ongoing credit monitoring could see rising write-offs, increased operational strain and reputational harm as default rates grow.
2. Employee Fraud and Internal Collusion
Employee-driven fraud is expected to stay one of the most damaging categories of organisational loss. This type of fraud takes place when staff steal company funds, manipulate financial data or collude with external individuals to bypass internal controls for financial gain.
In 2026, internal fraud is expected to increase significantly due to cost-of-living pressures and economic uncertainty, creating environments where ethical boundaries may shift for employees under financial strain. Businesses may see unapproved discounts, falsified time sheets, petty cash manipulation or inflated supplier invoices that appear justified on record.
3. Procurement and Invoice Fraud
Procurement fraud happens when fraudulent vendors submit false invoices for products not delivered, inflate service costs or duplicate invoices, hoping they will slip through unnoticed. Corrupt employees may also participate by approving these invoices in exchange for kickbacks. The procurement market is very vulnerable to fraud because most organisations still rely on manual approval processes.
Trend analysts predict a sharp increase in invoice manipulation in 2026 as criminals use artificial document creation tools to replicate supplier branding, invoice numbers and banking details. Typically, this form of fraud drains cash flow gradually, making it difficult to detect unless regular audits are in place. Businesses that do not validate suppliers properly may pay for fake services without realising it until audits are conducted long after the money is gone.
4. Identity Theft and Synthetic Identity Fraud
Identity theft is the act of using another person’s details without permission, while synthetic identity fraud takes it a step further by combining real information with fabricated person data to create new identities that appear real. Criminals are using these constructed identities to open accounts, secure credit, obtain services or commit financial offences without using traceable personal information.
Many businesses only verify surface-level applicant information, making it easy for fake identities to pass initial checks. Analysts warn that synthetic identity fraud could become one of the most sophisticated growth areas in 2026 because artificial intelligence (AI) tools can now generate documents that mirror authentic formatting. Once a fraudulent profile is approved, businesses face future payment defaults and difficulty holding the individual accountable.
5. Payroll Fraud
Payroll fraud is when employees manipulate compensation systems for personal benefit. This could include claiming payment for unworked hours, creating ghost employees, inflating overtime figures or altering banking details to redirect salaries. As companies digitise HR and payroll systems, fraudsters are finding ways to exploit poorly secured platforms.
Experts predict that 2026 will see a rise in payroll fraud, particularly within businesses that manage large workforces without regular auditing. Ghost employee schemes often run unnoticed for years until a discrepancy is discovered during system upgrades or departmental reorganisation. The cost implications compound over time, especially in labour-heavy industries.
6. Financial Statement Manipulation
This type of fraud involves altering accounting records to misrepresent a company’s financial health. It may be used to secure investment, obtain credit, avoid tax obligations or cover internal theft that has not yet been detected. Businesses experiencing economic pressure may be tempted to overstate revenue or underreport expenses to appear stable.
Experts believe financial reporting manipulation may become more widespread in 2026 due to increasing economic instability. While some cases are done on purpose, others stem from weak governance where errors are not identified in a timely manner.
7. Supplier and Vendor Impersonation
Supplier and vendor impersonation happens when individuals pose as legitimate vendors, often by spoofing emails or creating fraudulent supplier accounts that look legitimate. Typically, they contact businesses claiming bank account details have changed and request payment into fraudulent accounts. Many companies fall victim to this when communication processes lack verification steps.
Analysts predict that in 2026, the risk is expected to escalate as criminals refine social engineering tactics and AI-generated voice or e-mail mimicry. Once payment is made to the fraudulent account, recovery is extremely difficult.
8. Customer Account Manipulation and Refund Fraud
Refund fraud happens when customers return products fraudulently or manipulate refund systems to receive money they are not entitled to. It’s mostly common in retail where return policies are flexible, but it is increasingly spreading to digital service environments. Criminals may use stolen credit cards to purchase goods and request refunds to different accounts or claim non delivery to trigger reimbursement.
In 2026, analysts expect a surge due to growing e-commerce adoption.
9. Data Manipulation During Onboarding
Fraud during the onboarding process happens when individuals provide inaccurate personal information, inflate income or present altered documentation to secure approval. With digital onboarding replacing face-to-face verification, altered PDFs, edited IDs and adjusted bank statements are becoming harder to spot manually.
As businesses shift to automated online approval systems, experts predict that attempts at fraud onboarding will increase in 2026, particularly where digital systems lack verification integration.
10. Loan Stacking and Rapid Multi-Application Fraud
Loan stacking happens when people apply for multiple credit facilities at the same time before records update across databases, allowing them to secure more credit than they can afford. With digital lending speeding up approval times, this form of fraud is expected to be more prevalent in 2026. Businesses that do not check real-time credit activity may unknowingly approve high-risk applicants.
Cybersecurity Fraud Risks for SMEs
Besides the above trends, one other vulnerability SMEs need to be aware of is cybersecurity fraud. Most small businesses believe cyber criminals only go after larger corporations; however, the reality could not be more different.
SMEs are increasingly becoming targets for cyber criminals because attackers know these businesses often lack the resources and awareness to protect themselves. South Africa ranks among the most targeted countries in Africa for cybercrime. Industry estimates place the annual cost of cybercrime in South Africa at over R2 billion, with phishing alone responsible for the vast majority of digital banking fraud.
SMEs should know that cybercriminals do not target smaller businesses for a single big score; they are looking to exploit weak credentials to gain access, deploy ransomware to extort payments or steal customer data to sell on dark web marketplaces. This trend is set to increase in 2026 with the growth of technologies such as AI and with cybercriminals having access to these technologies.
Small businesses are encouraged to educate themselves on fraud prevention. Entrepreneurs can turn to the South African Fraud Prevention Service (SAFPS) for additional information.
