The factoring industry has spent the better part of the last decade being told that automation would solve its fraud problem. Invest in AI-powered invoice screening, the argument went, and the risk of fake receivables, synthetic identities, and document manipulation would be brought under control. In mid-2026, that premise is being tested — and the results are uncomfortable. Fraud attempts against factors and specialty lenders have not declined as automated screening has proliferated; in many cases, they have become more sophisticated in direct response to it. The tools that fraudsters are now deploying — including generative AI platforms capable of producing fabricated documents that pass optical character recognition and pattern-matching checks without triggering automated flags — were built, in part, to defeat the very systems that were supposed to stop them.
