How can a small business owner or their accountant tell whether the person who picks suppliers or approves purchases is getting secret payments from a vendor in return for the business, padded invoices or fake orders, and what controls stop it?

What should I check, step by step?

1. Split the jobs: whoever chooses a vendor or raises the purchase order shouldn't also confirm the goods arrived or approve the invoice. In the Utz case one person wrote the orders and approved the bills.

2. Match every invoice to an approved purchase order and to a receiving record made by someone else before it's paid. An invoice for goods nobody independent saw arrive is the first thing to check.
3. Require competing quotes above a set amount and keep them with the order, along with the reason the winner was chosen if it wasn't the cheapest. A sole-source purchase should name who approved the exception.
4. Compare prices over time: the same item from the same vendor creeping up, one vendor charging more than others for the same thing, or change orders and extras that keep growing on one buyer's projects.
5. Rank spending by vendor and by the employee who approves it. A vendor that gets more and more work from one person, especially a new vendor that person brought in, is worth a closer look.
6. Ask everyone who buys or approves spending to sign a conflict-of-interest disclosure each year (outside businesses, family ties to vendors, gifts and payments from vendors), and check it against your vendor list.
7. Tell vendors in your onboarding letter and on purchase orders that nobody at your business may ask them for payments or gifts, and how to report it confidentially. Vendors made up 11% of fraud tips in the ACFE's 2026 study.
8. Put a right-to-audit clause in contracts with your larger vendors so you can check their invoices against their records.
9. Watch for behavior the ACFE ties to corruption: an employee who is unusually close to a vendor, insists on handling one vendor personally, or resists rotating the account.
10. If you suspect a kickback, talk to your accountant and a lawyer before confronting anyone or the vendor, and keep the purchase, receiving and payment records as they are.

How are vendor kickbacks to employees usually paid for?

In the fraud tree in the ACFE's 2026 report, invoice kickbacks and bid rigging sit under bribery in the corruption branch, next to conflicts of interest in purchasing. The 2026 report defines corruption as a scheme in which an employee misuses their influence in a business transaction in a way that violates their duty to the employer to gain a direct or indirect benefit, such as bribery or conflicts of interest.

• The money normally comes out of the victim's own payments. In the Utz Quality Foods case announced by the U.S. Attorney's Office for the Middle District of Pennsylvania in 2016, the supplier's owner admitted that between 2010 and 2014 Utz's director of purchasing prepared bogus purchase orders and the supplier submitted false invoices against them for packaging Utz never received. After the director approved the invoices, the supplier paid part of each payment back. The information alleged about USD 1,474,765 paid by Utz and about USD 651,000 kicked back, some of it disguised as fees for consulting through a bank account opened in the name of a consulting business that didn't exist.
• In a U.S. Postal Service repairs case, a contractor pleaded guilty in October 2026 to paying over USD 465,000 in kickbacks between May 2022 and February 2024 to an employee of the prime contractor in return for steering work to him; according to the Justice Department, they inflated estimates and invoices to build in the money for the kickbacks.

What does the Williams-Sonoma kickback case show about vendor approval controls?

On August 11, 2026 a former Williams-Sonoma vice president of engineering, projects, planning, facilities and real estate pleaded guilty to two wire fraud conspiracy counts and a money laundering conspiracy count, according to IRS Criminal Investigation. He had authority to enter vendor contracts and oversaw warehouse leasing and the purchase of steel racking, forklifts and related services.

• From 2018 he accepted kickbacks for steering business to three New Jersey companies that supplied forklifts, racking and machinery, using a shell company he set up to receive and hide the payments: over USD 12.2 million in all. From 2020 to 2022 he also diverted more than USD 4.1 million in real estate broker commissions on company warehouses to accounts of that shell company. Sentencing was scheduled for November 3, 2026.
• The common thread with the Utz case is one person who could both choose the vendor and approve what it was paid. The fix is not more trust in that person but a second set of eyes on vendor selection, delivery and price that the person doesn't control.

What does the ACFE 2026 report say about kickbacks and corruption?

Occupational Fraud 2026: A Report to the Nations covers 2,402 cases. Corruption appeared in 45% of them, with a median loss of USD 150,000 and a median duration of 12 months. At about USD 12,500 lost per month, it had the highest median velocity of any scheme after financial statement fraud.

• Corruption was the most common scheme at both organizations with fewer than 100 employees (40% of cases) and those with 100 or more (42%). It was also the most common scheme in each of the eight departments where fraud most often started. Purchasing staff were the perpetrators in 117 of the cases broken down by department, and corruption was present in 83% of those.
• Perpetrators of corruption more often had an unusually close association with a vendor or customer: 29% of corruption cases against 17% of all cases. Overall, 43% of frauds were first detected by a tip and 11% of tips came from vendors, which is why telling vendors how to report a request for payment is one of the cheapest controls there is.