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Invoice Fraud: Are You and Your Staff on Alert?

Invoice Fraud: Are You and Your Staff on Alert?

According to UK Finance, which represents 250 firms across the banking and finance industry, its members were victims of 3,280 cases of invoice fraud last year, costing them £92.7m, less than a third of which was returned.

Are you and your staff aware of invoice fraud—or the steps you can take to prevent it?

What is invoice fraud?

In an invoice or mandate scam the victim attempts to pay an invoice to a legitimate payee, or believes they are doing so, but the payment is redirected to an account controlled by a criminal.

You may be thinking this could never happen to you, but let’s look at the ways this is put into practice.

  • criminals posing as conveyancing solicitors, builders and other tradespeople
  • criminals posing as a supplier, claiming their bank account details have changed (often after the criminal has somehow got information about existing, legitimate suppliers by, for instance, intercepting emails, compromising an email account, or calling your company with what sounds like a harmless query. “Can I just ask who supplies your…?”

According to UK Finance’s Fraud the Facts 2018 report, invoice and mandate scams were the third most common type of APP (Authorised Push Payment, where people are tricked into authorising payments, as opposed to fraud via unauthorised means). However, they accounted for the largest share of losses in the APP category, at 35%, totalling £123.7 million (this includes personal as well as business losses).

The majority of losses by value were from business accounts, where the average payment was £20,750, reflecting the fact that businesses make higher-value payments more regularly.

Could your business afford to lose that kind of money?

Awareness and prevention of invoice fraud

If you weren’t aware of this type of fraud, you’re not alone. UK Finance’s Business Payment Survey March 2019 found that on average, 57% of businesses weren’t aware of it—and small businesses were the least aware. Awareness rose with business size; 55% of sole traders were aware of invoice fraud, as opposed to 84% of large businesses.

To prevent invoice and mandate scams, UK Finance recommends these five measures:

  • 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

Never transfer money to a new bank account if the people asking you to do so can’t give you the correct original bank details

Always make sure that you and your staff are aware of all the ways invoice fraud can present itself, and that everyone knows what to do if they suspect they’ve encountered it.

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