‘Shallowfakes’ Could Be Costing You $100k a Year: Here’s What You Can’t Afford to Overlook

The next time you think you don’t have time to question or look into a slightly suspicious expense report, think again.

The rise of “shallowfakes” – low-value financial rule-bending, such as expense embellishment — is adding up to significant business losses.

And most finance pros turn a blind eye to them: More than 85% have ignored an expense, reimbursement, or claim they believed was fraudulent, according to the latest Medius Financial Census Report.

Why Do We Overlook Shallowfakes?

Why? Nearly three-quarters believe these small forms of fraud that, on the surface, are minor financial losses, are already too common in workplaces.

“Costly deepfake fraud gets all the headlines,” said Chris Wilmot, Chief Financial Officer at Medius. “But while finance professionals keep a sharp eye out for these scams, hundreds of thousands of dollars are slipping out the back door through shallowfake fraud. These seemingly minor ‘micro frauds’ add up to death by a thousand cuts for organizations without the controls in place to catch them.”

Now consider this irony: While 85% of finance pros overlook so-called small internal fraudulent activity, 93% are concerned about AI-generated fraud. Organizations reported average yearly losses of $168,000 due to invoice fraud, with respondents seeing an average of one successful invoice fraud attempt per month.

When it comes to external AI fraud, about 25% reported six-figure losses, according Trustpair’s Fraud in the Cyber Era: 2026 Fraud Trends & Insights.

For small- and mid-size businesses, risks truly remain in-house. Yes, you’re at risk from AI threats, but you don’t want to focus on them alone.

Preventing Shallowfake Activities

Here are tips to prevent shallowfake activities. While these scratch the surface, you can find more in-depth details in the Association of Certified Fraud Examiners’ (ACFE) Occupational Fraud 2026: Report to the Nations:

• Establish and enforce a code of conduct: When you have clear ethical expectations and rules that are often reviewed, you can set a tone that discourages internal misconduct.
• Establish mechanisms to report fraud. Provide independent, confidential and anonymous reporting methods so workers feel safe speaking up without fear of retaliation. Increasingly, employees rely on web applications rather than phone hotlines.
• Train on your codes and reporting methods. Employees whose organizations provide fraud awareness training were more than two times as likely to submit a tip that led to fraud detection.
• Lean into internal controls: You want to routinely check work processes and financial reports to spot unusual patterns early. Use automated tools and software to scan transactions to flag anomalies before losses mount. The ACFE found that the presence of an internal control reduced fraud losses by more than a third.
• Conduct surprise audits: These keep employees accountable and can help catch hidden schemes.