Key takeaways
- The most common schemes are duplicate claims, inflated amounts, personal costs passed off as business costs and fake receipts.
- In the ACFE’s 2024 Report to the Nations, expense reimbursement schemes appeared in about 13% of the occupational fraud cases studied, with a median loss of $50,000.
- Receipt red flags include round numbers, missing line items, mismatched dates and the same receipt submitted twice.
- Keeping the original receipt image with every claim creates an audit trail that makes fraud harder to hide and easier to spot.
What is expense fraud?
Expense fraud happens when an employee, contractor or owner gets paid back for spending that wasn’t a real business cost. Sometimes it’s deliberate: a fake taxi receipt or a family dinner labeled “client meeting.” Sometimes it starts as carelessness, like claiming the same hotel night twice, and turns into a habit when nobody notices.
It matters even in a five-person business. Each claim may only be $20 or $40, but the money comes straight out of profit, and the false records can also flow into your tax return. If a personal cost ends up deducted as a business expense, that’s a tax problem as well as a trust problem.
Keep a real receipt behind every claim with the Manage Receipt app.
Common types of expense fraud
| Scheme | What it looks like | Example |
|---|---|---|
| Duplicate claims | The same expense submitted twice, often as a receipt and a card statement | A $180 hotel night claimed in March and again in April |
| Inflated amounts | The receipt total is changed, or a tip is added that wasn’t paid | A $42 dinner becomes $92 with one edited digit |
| Personal as business | A real receipt, but the purchase wasn’t for work | Weekend groceries filed as “team snacks” |
| Fake receipts | Receipts made with online generators, templates or photo editing | A ride that never happened, on a receipt from a template |
| Mileage padding | Extra miles or trips added to a log | A 12-mile round trip logged as 40 miles |
| Double dipping | Claiming a cost already paid on a company card or by a client | Lunch charged to the corporate card and also claimed in cash |
Red flags on receipts
Most expense fraud is caught by someone who looks at the receipt and thinks “that’s odd.” These are the signs worth checking:
- Round totals like $50.00 or $100.00 on meals, taxis or fuel, where exact cents are normal.
- No line items, only a total, especially for restaurants and hotels.
- Fonts, spacing or alignment that differ within the same receipt.
- Dates on weekends, holidays or days the person wasn’t traveling.
- The same receipt number, amount or vendor appearing on two claims.
- Receipts submitted as screenshots or PDFs from unknown websites instead of the vendor’s own email.
- Missing vendor address, phone number or tax line, which real point-of-sale systems usually print.
- Claims that sit just under the amount that requires a receipt or a manager’s approval.
- A sudden jump in someone’s monthly claims with no change in their work.
One red flag isn’t proof. People lose receipts and some small vendors do print plain slips. A pattern across several claims is what deserves a closer look.
How to prevent expense fraud
- Write a clear policySay what’s covered, what needs a receipt and the deadline to submit.
- Require the originalAsk for an image of the actual receipt, not a retyped amount or a statement line.
- Separate dutiesThe person who approves claims shouldn’t be the one who submits or pays them.
- Check for duplicatesCompare dates, amounts and vendors across claims every month.
- Spot-checkReview a few random claims each month and call a vendor now and then.
A written expense policy does a lot of the work. When people know receipts are kept and checked, honest mistakes drop and deliberate fraud becomes much less tempting. If you run the business alone, the same habits protect you at tax time: a clean record of real receipts is your best defense if the IRS asks about a deduction.
The IRS requires receipts for all lodging and for other travel, gift and vehicle expenses of $75 or more under Publication 463. Your own policy can set a lower receipt threshold, and many small businesses simply require a receipt for everything.
Original receipts, attached to every claim
Manage Receipt stores the original image of every receipt you scan or forward by email, and attaches it to the expense report. Reviewers see the real receipt next to the extracted vendor, date and total, which makes edited amounts, duplicates and missing line items much easier to spot.
Explore AI Expense ReportsFrequently asked questions
What are signs of expense fraud?
Common signs are round totals, receipts without line items, the same receipt on two claims, dates when the person wasn’t working or traveling, and amounts just under approval limits. Inconsistent fonts or spacing can point to an edited or generated receipt. Look for patterns across several claims rather than judging one receipt.
How common is expense fraud?
It’s one of the most frequent forms of employee fraud. The ACFE’s 2024 Report to the Nations found expense reimbursement schemes in about 13% of the occupational fraud cases it studied, with a median loss of $50,000 per case. Small businesses are exposed because one person often handles everything.
How do you detect fake receipts?
Compare the receipt with what a real one from that vendor looks like, check for line items, tax and a receipt number, and match the amount to a card statement. Fake receipts often have round totals, generic layouts or missing addresses. When in doubt, ask for the vendor’s emailed receipt or call the vendor.
What happens if an employee commits expense fraud?
It depends on your policy and the amount. Many businesses require repayment and treat it as grounds for discipline or dismissal. Large or repeated fraud may be reported to the police. Document what you find, keep the original receipts and claims, and get legal advice before acting.