Over four in ten businesses in the UK are unaware of the risks posed by invoice fraud, despite these scams costing firms almost £93m in 2018, research by UK Finance has revealed.
Invoice scams take place when fraudsters trick businesses into transferring money by posing as legitimate payees. Around £92.7m was lost by businesses to such scams in 2018, according to UK Finance’s latest Fraud the Facts 2018 report. There were 3,280 invoice and mandate scam cases involving businesses over the year, with an average loss per case of over £28,000.
£29.6 million of the money lost to this type of fraud was returned to business customers.
Separate research from UK Finance’s Business Payments Survey has found that over four in ten (43 per cent) businesses were unaware of the existence of invoice fraud. The survey of 1,500 firms across the UK found that over half (55 per cent) of sole traders were aware of the threat of invoice fraud compared to two-thirds (68 per cent) of small business and over four in five (84 per cent) large businesses. Only one in seven (14 per cent) sole traders have taken steps to protect themselves from these kinds of scams, compared to around half (47 per cent) of small businesses and two thirds (63 per cent) of large firms.
Katy Worobec, managing director of economic crime at UK Finance, said: “Invoice fraud could happen to businesses of all sizes. It’s vital that all employees are trained to identify potentially fraudulent transactions and follow the advice of our Take Five to Stop Fraud campaign.
“The gangs behind this type of fraud are increasingly sophisticated and will often get hold of details that allow them to pose convincingly as regular suppliers.
The role of the CFO in an organisation
“If a someone contacts you asking for a supplier’s bank account details to be changed, always verify with that supplier separately on the phone or in person, using the contact details you have on file.
“If you suspect you’ve fallen victim to fraud, contact your bank immediately and report it to Action Fraud.”
Invoice fraud involves criminals targeting businesses by posing as a regular supplier and making a request for their bank account details to be changed, often by email. Businesses are then tricked into sending money to an account controlled by the fraudster rather than the genuine supplier. Often the criminals will try to acquire details from businesses, such as the date when regularly payments are due, to make their approach more convincing.
Advice from the Take Five to Stop Fraud campaign on how to stay safe from invoice scams:
- Always confirm any bank account details directly with the company either on the telephone or in person before you make a payment or transfer any money.
- Criminals can access or alter emails to make them look genuine. Do not use the contact details in an email, instead check the company’s official website or documentation.
- If you are making a payment to an account for the first time, transfer a small sum first and then check with the company using known contact details that the payment has been received to check the account details are correct.
- Contact your bank straight away if you think you may have fallen victim to an invoice or mandate scam.