Fraud prevention in employee benefits: How employers and HR teams can protect plans, data, and people

Employee benefits are built on trust. Trust that sensitive data is protected, funds are used appropriately, and employees can access what they need without unnecessary friction. But as benefits administration becomes more digital and interconnected, fraud has become a growing risk for employers and HR teams.

From phishing attacks targeting benefits administrators to fraudulent claims and unauthorized account access, today’s fraud threats can impact plan costs, employee experience, and organizational credibility.

The good news? With the right controls, education, and partners, most benefits-related fraud is preventable.

Why fraud prevention matters in benefits administration

Benefits systems hold some of the most sensitive information in your organization: personal data, health information, payroll details, and payment credentials. That makes HR and benefits teams an increasingly attractive target for fraudsters.

According to the FBI, business email compromise (BEC) resulted in more than $2.9 billion in losses in 2023, and HR departments are often in the crosshairs due to their access to employee records and benefits systems.

For employers, fraud can lead to:

• Increased plan costs and financial leakage
  
• Exposure of employee data and identity theft
  
• Compliance and regulatory risk
  
• Loss of employee trust
  

Fraud prevention is no longer just a security concern. It’s a benefits strategy.

Common fraud tactics targeting benefits teams

Fraudsters often rely on a mix of technology exploits and human manipulation. The most common tactics impacting employee benefits include:

Social engineering

Social engineering manipulates individuals into sharing confidential information by creating urgency or authority. For HR teams, this might look like a request that appears to come from an executive, a benefits vendor, or a financial institution asking for immediate action.

Phishing, smishing, and vishing

• Phishing: Fraudulent emails posing as benefits providers or internal teams
  
• Smishing: Text messages requesting verification or account updates
  
• Vishing: Phone calls attempting to extract personal or plan information
  

These attacks are designed to capture login credentials, PINs, or employee data.

Fake benefits portals and websites

Fraudsters create convincing replicas of benefits or payments portals to collect credentials or install malware, sometimes redirecting users to the real site after the damage is done.

Deceptive links

A link may look legitimate but redirect to a fraudulent site. Warning signs include:

• Slight misspellings or altered domains
  
• Numbers substituted for letters
  
• Unexpected links related to enrollment, payroll, or claims
  

Hovering over links before clicking can help reveal their true destination.

How to identify fraudulent benefits-related communications

Fraudulent emails and messages often include:

• Urgent language demanding immediate action
  
• Requests for passwords, PINs, bank details, or Social Security numbers
  
• No alternative way to verify the request
  
• Design flaws, distorted logos, or poor grammar
  
• Sender addresses or URLs that don’t exactly match the vendor
  

Legitimate benefits providers, including WEX, will never send unsolicited messages asking for sensitive account information.

Best practices for fraud prevention in employee benefits

1. Secure access to benefits systems

Use multifactor authentication (MFA) for benefits platforms, payroll systems, and email accounts. Ensure systems are regularly patched and require verification for changes to employee data or payment instructions.

2. Protect devices and communication channels

Unsecured laptops, mobile devices, and shared workstations are common entry points for fraud. Implement device management tools and establish clear guidelines for credential sharing and remote access.

3. Monitor and reconcile benefits transactions

Regularly review transaction data, claims activity, and reimbursements to identify anomalies early. Alerts and reporting tools can help flag unusual patterns before they become costly issues.

4. Train and empower HR and benefits teams

Human error remains a leading cause of fraud. Ongoing training on phishing, password hygiene, and internal escalation processes can significantly reduce risk. Employees should feel confident pausing, questioning, and reporting suspicious activity.

5. Verify urgent requests independently

Never rely solely on contact information provided in an email or message, especially when it involves payments or employee data. Confirm requests using trusted channels such as:

• Known vendor support contacts
  
• Information in official benefits portals
  
• Verified numbers on invoices or plan documentation
  

Everyday habits that reduce fraud risk

• Use strong, unique passwords and avoid reuse across systems
  
• Keep software, browsers, and security tools updated
  
• Avoid accessing benefits systems on public Wi-Fi
  
• Regularly review who has access to benefits and payment systems
  
• Securely dispose of documents containing sensitive information
  

If a team member clicks a suspicious link, quick action, such as deleting the message, blocking the sender, and resetting credentials, can limit damage.

Why partnership matters in fraud prevention

Fraud prevention works best when employers and benefits providers work together. Your benefits and payments partners offer tools, analytics, alerts, and expertise that complement your internal controls.

By maintaining open communication and leveraging provider-led fraud prevention capabilities, employers can build a more secure benefits ecosystem, without adding complexity for HR teams or employees.

Building a safer, smarter benefits experience

Fraud threats will continue to evolve, but strong prevention strategies help employers stay one step ahead. With the right combination of technology, training, and trusted partnerships, HR teams can protect benefits programs, employee data, and organizational trust, while delivering the seamless experience employees expect.

Discover how WEX is redefining employee benefits for 2026 and beyond.

Learn more.

Copyright ©2026 WEX Inc. All rights reserved. The information in this document is subject to change without notice.