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Scam warning for small businesses

25 August 2015

Fraud prevention experts Cifas and Action Fraud have warned small business to be on extra alert for fake invoices after figures revealed an alarming increase in scams in the first six months of the year.

Reports of fake invoice scams targeting businesses have rocketed with 749 businesses reporting falling victim to this type of scam to Action Fraud between January and June 2015 alone. In comparison there were 603 in the whole of 2014 and 739 in 2013. 

Yet with more than 5 million SMEs in the UK and many crimes going unreported, Cifas and Action Fraud fear the real figure for 2015 is considerably higher.

Fake invoice scams typically work by fraudsters pretending to be a supplier and contacting the business to say that the account details that an invoice needs to be paid to have changed. Innocently, an employee amends the account details only for the organisation to later find out that they have been sending money to a fraudster rather than a genuine supplier. The more detail a fraudster has about an organisation, the easier it is to pose as a supplier and make the scam convincing. In some reported cases, fraudsters have been helped by employees within the organisation feeding information about genuine suppliers.

The warning from Cifas and Action Fraud comes in the height of summer, a time where fraudsters have been known to take advantage of experienced staff going on holiday, leaving less experienced or temporary replacements who may be less likely to spot the scam.

Although the scam could work on businesses of any size, smaller businesses are most at risk and may find it harder to recover from losing large amounts of money. Surrey police recently revealed they are investigating two allegations where businesses appear to have been conned out of around £1 million.

Simon Dukes, Chief Executive, Cifas said: 
“Fraudsters often take advantage of organisations with less resources and less staff leaving small businesses more vulnerable to fraud. We know greater awareness is a powerful tool in fraud prevention and we urge small businesses to stay alert and to ensure their employees are aware of invoice fraud too.”

Head of Action Fraud, Pauline Smith said: 
“It is important that employees are made aware of invoice scams and are ready to recognise the signs of fraud. Incidents of invoice fraud are underreported and therefore it is difficult to know the true scale of this fraud type, however what we do know, is that this type of fraud prevails across all types of business and no one type of industry is immune. Those organisations that are worried they may fallen victim to fraudsters should always report to Action Fraud”.

Tips for businesses to protect against invoice scams:

  1. Ensure all staff, not just finance teams, know about this fraud - especially those covering roles during the holidays.
  2. Never respond to the contact details provided by someone requesting changes to financial details. Instead, use established email and telephone contacts to check that any request has come from the genuine supplier.
  3. Always review invoices to check for inconsistencies/errors, such as a misspelt company name.
  4. Where possible establish at least two specific points of contact with suppliers so that all invoice changes can be confirmed with both contacts.
  5. Contact suppliers for payment of larger invoices in advance of making payment to ensure that payment is made to the correct bank account.
  6. Consider what information is publicly available about your business and whether it needs to be public. 
  7. Never leave invoices unattended in the office or on a desk.
  8. Ensure your computer systems are secure and that antivirus software is up to date.

Notes for editors:

  1. To arrange an interview with a senior spokesperson from Cifas or for further information, please contact us
  1. More detail about the Surrey case referenced above.

About Cifas

Cifas aims to make the UK a safer place to do business, by enabling organisations in every sector to prevent fraud and protect the public through the sharing of confirmed fraud data.  Cifas has over 300 Members spanning the public and private sectors. In 2014 alone, Cifas Members prevented over £1 billion of avoidable fraud losses by using Cifas’ National Fraud Database, which records confirmed fraud cases.  Cifas offers Protective Registration for individuals whose identities are at risk of being used fraudulently, for instance after a burglary.  In 2014, Cifas launched a new scheme called Protecting the Vulnerable.  This service is offered free of charge to local authorities to protect those under the care of Court Deputies who are unable to access financial products and whose identities may be at risk.

About Action Fraud

Action Fraud is run by the City of London Police and is the UK’s national fraud and cyber crime reporting centre, providing a central point of contact for citizens and businesses. The National Fraud Intelligence Bureau also hosted by the City of London Police,  acts upon the information and crimes reported to Action Fraud, developing and disseminating crime packages for investigation locally, regionally and nationally, and executing a range of disruption and crime prevention techniques for victims across all sectors to target criminality and engineer out the threat from fraud and cyber crime.

You can report fraud and cyber crime to Action Fraud online or by speaking to a specialist fraud and cyber crime adviser on 0300 123 2040.

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Posted by: Cifas Press Team

press@cifas.org.uk

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