Financial Fraud Action UK’s (FFA UK) intelligence bureau has reported an upsurge of two scams in particular – invoice fraud, where criminals send in fake requests for payment – and phone fraud, where companies are telephoned and tricked into revealing important payment details. Because fraud is not always detected immediately, stolen funds are often quickly transferred outside of the UK making it near impossible to get the money back.

Police and bank reporting suggest the following industries have been hit hardest:

• Agriculture
• Construction
• Manufacturing
• Legal
• Accountancy
• Retail
• Pharmaceutical industry
• Energy sector
• Publishing
• Outside of business, public sector bodies are also a target for fraudsters

To combat this, FFA UK is launching a major awareness raising campaign today to educate businesses about the dangers and to advise them on how to avoid falling victim to these frauds. A simple guide and posters [attached] setting out how to avoid these scams, are being distributed to companies in those sectors most at risk and placed in public workplace environments such as staff rooms. These are available on the FFA UK website. Education packs are also available to help staff detect and avoid fraud.

The scams and how to avoid them are explained in the literature.

Invoice fraud

• How the scam works – Criminals are researching the existing suppliers of companies through publicly available information and then contacting the business either by phone or written correspondence pretending to be their supplier and requesting that payment details are updated. With companies routinely asked to change or update payment details, the request seems perfectly reasonable but when the money is processed, it is sent to an account held by the fraudster.

How to prevent it – You should immediately be on alert if you receive a call out of the blue asking you to update payment details. The criminals will have done their homework on you – so don’t assume because they know a bit about you and your company that they are genuine. If you’re not sure who you are speaking to, call the company on a number that you know, and ask to be put through to the person who you’ve spoken to before. If you’re unsure about the validity of an invoice, call a contact who you know at your supplier to check its authenticity.                

Phone fraud

• How the scam works – Criminals are researching companies and then telephoning them up armed with information which makes their approach sound more credible. They will then lure the company owner or employee into revealing key financial information or convince them to transfer money into a different account under a false pretence – such as to help prevent fraud identified on their bank account. The criminal may pretend to be from a bank or from law enforcement agencies.  The trick is often successful because criminals ask their victim to hang up and call back on a number they trust, while the criminal simply keeps the line open. Then, unknowingly, the victim finds themselves talking to an accomplice of the criminal on the same line.

• How to prevent it – You should immediately be suspicious if you get a cold call and are asked a lot of questions relating to your company’s financial information. There is no legitimate reason for the police or your bank to ask for your four digit PIN, or to ask that you transfer or withdraw money, or give your card to a courier for them to collect. If you are asked to do any of these things, someone is trying to con you. If in doubt, call back the organisation on a number you trust but do it on another phone or leave it five minutes. This is important because criminals are able to keep the line open for two minutes after you put down the phone, which means you could end up inadvertently talking to the criminal or their accomplice again.

Real life examples of how businesses have been defrauded

• A property firm in North London lost £99,500 after a Director was tricked into revealing key information to a fraudster over the phone. He was told that a payment he had made the previous week for employee salaries had not been processed and that some verification checks were now necessary. Not wanting to delay the payment further, the Director gave his financial details over the phone, including the security code from his online banking authentication device. The fraudster was then able to log on to the company’s online banking page and transfer money out of the account.

• Farmers in Selby, Yorkshire, were conned after a criminal gang claiming to be from a bank’s fraud detection department claimed that fraudsters were trying to cash cheques in their names. They were encouraged to move money into another account so that the frauds would stop, but these were controlled by the gang and five businesses lost tens of thousands of pounds each.

Commenting, Katy Worobec, Director of FFA UK said:

“Criminals are turning their attention to businesses because successfully scamming a company can net the fraudster a much bigger haul than they could steal from an individual. Fraudsters also understand that small businesses are used to processing all kinds of payments and so a simple request to change an invoice or provide some financial information has a good chance of deceiving an accounts department.

“To avoid falling victim to the fraudsters, always double-check who you’re talking to and be suspicious if you receive a cold call and are asked for lots of information. If you’re ever in doubt, ring back the company on a number that you know, and ask to be put through to the person who you’ve spoken to before.”                

The campaign is backed by Chartered Institute of Public Finance and Accountancy (CIPFA), the professional body for people in public finance. CIPFA recently launched the Counter Fraud Centre (CCFC) in July 2014 to lead and co-ordinate the fight against fraud and corruption across public services.