Comprehending Invoice Fraud Attacks and Enhancing Microsoft 365 Security

What Are Invoice Fraud Attacks? 

An invoice fraud attack happens when attackers send bogus billing requests that look real. They mimic actual vendors or partners and pressure the target to make a payment. The scam often uses forged email domains, copied invoice templates, and a familiar tone to pass quick checks. Once the payment goes out, funds move fast through layered accounts and become hard to trace. It’s simple social engineering, just dressed as normal business.

Common Techniques Used in Invoice Fraud Attacks 

With phishing attacks, social engineering, and a network of fake call centers, cybercriminals are scamming victims out of large sums of money. First, attackers manipulate victims into allowing remote access to their PCs, then steal data and threaten to leak it if a ransom isn't paid. 

Social engineering phishing campaigns are growing increasingly successful, similar to previously identified campaigns that used phishing emails containing malicious documents to trick victims into installing BazarLoader backdoor malware. This results in a growth in the infrastructure behind attacks as cybercriminals try to make as much money as possible. 

This new phishing campaign, called Luna Moth, skips the malware infection, instead using social engineering to gain access to networks. The attack has claimed victims in multiple sectors, including legal and retail, costing hundreds of thousands of dollars. Luna Moth has also plagued Microsoft 365 email users across hundreds of organizations. This attack is so popular because the hacker already likely knows who is approving invoices, what services the company is using, and what invoices for those services would look like. The threat actor crafts an email sent to the right person in the company that seems completely genuine. 

Invoice fraud is a prevalent problem for companies. Nearly 7 out of 10 companies are affected by Business Email Compromise (BEC) each year. This attack employs several techniques to bypass traditional email security phishing and spam filters, including:

Social Engineering in Phishing Campaigns

Every part of a phishing email is designed to create a sense of trust and urgency in the victims. For example, by impersonating a trusted vendor. The context of a social engineering attack also leverages curiosity, which encourages targets to overlook uncertainty.

Trusted Vendor Impersonation and Supply Chain Exploitation

Compromising one weak link in a supply chain can compromise the entire chain. After accessing trusted accounts, threat actors have full access to invoices, confidential business data and information, bank accounts, and routing numbers, all of which they can use to cause financial damage or mount ambitious whaling attacks.

Spoofing Known Business Workflows 

Invoice fraud emails were engineered to target a common business workflow of paying an invoice for a vendor doing business with an organization. It is not uncommon for vendors to send reminder emails about upcoming or missed payments. With the increased number of vendors in contact with organizations, it is hard for security teams and end users to keep track of all communications and invoice due dates. When common workflows experience email spoofing, end users have a higher chance of taking action versus exercising caution.

Email Spoofing Techniques

Scammers make messages look like they're from a vendor or colleague by forging the header and display name. Recipients see the familiar address and act without verifying, because it looks normal. It's social engineering. The attacker doesn’t have to break in. Instead, they spoof the from-fields or use lookalike domains, get a user to click, and the fraud rides on that perceived trust, which is why simple checks fail and detection needs identity context, behavioral signals, and a little user friction to stop it.

Account Takeover

A phishing email is all it takes for attackers to hijack a real employee or supplier's mailbox. By sending a false "provider alert" email, they can simply ask the user to re-enter credentials in a spoofed login page. The user types their credentials, and the account is compromised. No mystery. From that hijacked mailbox the attacker sends realistic invoices and payment requests that bypass allowlists, SPF/DKIM checks and many gateway rules, because the mail originates from a trusted identity and appears legitimate to recipients and to detection systems.

Why Does Microsoft 365 Security Fall Short? 

Despite existing email protection from Microsoft Exchange Online Protection (EOP) in Microsoft 365, 83% of users have experienced email security breaches. Microsoft 365 security falls short in safeguarding users and critical business assets against credential phishing, account takeovers, and other dangerous email threats that cloud email users face daily.

Cybercriminals have previously abused Microsoft Office 365 to target files in ransomware attacks. Files are stored via "auto-save" and backed up in the cloud, giving end users the impression data is protected from an attack. Files can be vulnerable to a ransomware attack as simple configuration errors can compromise their Microsoft 365 tenant, and even the experts can't recover from the damage.

Ongoing phishing campaigns can hack you even when you're guarded by modern authentication protocols. Microsoft stated that even when protected with multi-factor authentication (MFA), there were attacks that couldn't be stopped on their own, and attackers are sitting on these compromised email addresses and accounts for extended periods and using them to trick users by pretending to be colleagues.

Enhance Microsoft 365 Security

Email awareness matters more than most realize. The problem is that phishing messages look clean, professional, even routine. Email security training helps users pause before they click, but habits seal the gap. A few simple checks go a long way.

Watch for spelling or grammar slips; they often reveal a fake. Odd subject lines or mismatched signatures are another tell. Don’t trust the display name alone. Attackers spoof it, and even a real address might be from a compromised account. Vague language, strange tone, or urgency should trigger caution. If something feels off, call or message the sender separately. Never reply directly to a suspicious email.

Scan attachments and links before opening. Use a URL or malware scanner to check for hidden payloads. Verify every shared link. Phishing attackers hide malicious redirects behind what looks like normal content. And keep awareness training active, not just annual. Teams forget fast. Training should show how to spot spear phishing and what to do when a message seems wrong.

People make mistakes; systems need to catch what they miss. Layer defenses with a security platform that sees intent, not just content. A good solution filters, detects, and adapts in real time, blocking sophisticated threats before they hit the inbox. Full integration matters too: control from end to end, tuned to how your organization actually communicates. That’s how you keep the edge.

Microsoft 365 Security & Invoice Fraud FAQ

Review how to keep your account secure from invoice fraud.

How do cybercriminals use invoice fraud to bypass Microsoft 365 email security?

By avoiding malware and leaning on psychology, they dodge standard filters. Attackers use clean documents and convincing sender domains to avoid detection. They exploit trusted email services, registered look-alike domains, or compromised vendor accounts. 

What is Business Email Compromise (BEC) and how is it related to invoice fraud?

BEC is when criminals impersonate executives or suppliers to trick employees into transferring funds. Invoice fraud is one of its most common forms. Instead of hijacking the entire system, they hijack trust.

What are the warning signs of a phishing email containing a fraudulent invoice?

Look for urgency, vague wording, and subtle domain changes. Real vendors rarely rush payments or send unexpected invoices. Misspelled names, mismatched logos, or odd formatting also give it away. The biggest clue is context. If the payment doesn’t match any real transaction, it’s likely bait.

How does account takeover enable invoice fraud attacks?

Once criminals control a real email account, their messages inherit trust. They read old threads, copy tone, and resend genuine invoices with new bank details. Everything looks routine until finance notices missing funds. Because it’s a real mailbox, security tools often see nothing wrong.

What is the Luna Moth phishing campaign targeting Microsoft 365 users?

Luna Moth is a long-running social engineering campaign that sends fake subscription invoices. The emails urge users to call a support number to dispute charges. Once connected, the attackers guide victims into installing remote-access tools.

Can ransomware be delivered through invoice fraud emails?

Yes, though it’s less common than purely social scams. Attackers may attach infected documents or link to a malicious download. Once opened, the payload executes through macros or exploits and encrypts local data. The invoice is just a decoy to trigger the click.

What should employees do if they suspect they’ve received a fraudulent invoice email?

Don’t reply to the message, open attachments, or click any malicious links. Report it immediately to the security or finance team for review. Quick reporting limits damage. If opened by mistake, disconnect from the network and alert IT. 

What are the best practices for verifying the legitimacy of invoice emails?

Confirm invoice details against prior records or purchase orders. Call the vendor if there are any discrepancies, but don’t trust any contacts listed in the email. Only use established vendor contact methods.

Keep Learning About Microsoft 365 Security 

Invoice fraud works because it leans on routine habits, and once people see how these messages are built, they start catching them early. Phishing accounts for over 90% of cyberattacks. That means Microsoft 365 security needs tools that can spot the odd request. Inbox users also need to learn to slow down and check for invoice fraud before anything spreads. One slip can open a wide entry point for attackers.

Strong email security helps blunt the more deliberate campaigns like spear-phishing or ransomware crews probing for a single weak link.  Spam filtering won’t stop everything, but it cuts the noise enough for real signals to stand out, and that allows employees to focus during email triage when something suspicious shows up. Effective defense isn’t just about filtering; it’s a layered system that inspects behavior in transit and in the inbox, giving teams room to react before damage lands. That’s the point of comprehensive cloud email security. Keep everything coordinated, updated, and ready to go.

Remember: hackers don’t have a single playbook, and scam tactics change fast online. Don’t let invoice fraud or any other social engineering attacks be a surprise. Read Guardian Digital’s newsletter to stay plugged into the latest cybersecurity updates.