Fraud prevention experts Cifas and Action Fraud have warned small businesses to watch out for fake invoices after noticing that reported invoice scams have ‘rocketed’ in the first half of this year.
Action Fraud said that they had received reports of 749 businesses falling prey to invoice scams between January and June 2015, in comparison to 603 in the whole of 2014 and 739 total reports in 2013 – and with many scams going unreported, the figure may be higher.
Businesses are unlikely to have fared better over the summer season, when scammers are known to take advantage of the fact that many regular and experienced staff are on holiday, often leaving temporary or less experienced staff – who are less likely to have the time and knowledge to spot scams – to deal with invoices.
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”.
How fake invoice scams work
While you may be able to easily spot an invoice for work or supplies that are obviously not appropriate for your business – why has your business partner ordered 5 tons of bird food when you produce custom printed balloons? – fake invoice scammers usually do something rather cleverer.
Often they pose as a supplier, contacting you with a change to the invoice payment details – hoping that you or an employee will change the account details and not discover, until it’s far too late, that the money has gone into the scammer’s bank account (and that your genuine supplier isn’t too happy about their unpaid invoice).
The more detail scammers have about your business – and about your suppliers – the easier it is for them to pose convincingly as a genuine supplier. In the worst case scenarios, Cifas and Action Fraud warn, dishonest employees have been known to feed these details to scammers.
Smaller businesses ‘most at risk’
Any size of business can potentially be a victim of invoice scams, and although small business owners may not be so distanced from the payment process as managers and owners of larger companies, making them more aware of who is and who isn’t a genuine supplier, smaller businesses are often seen as an easy target – and may find it harder to recover from losing large amounts of money.
Simon Dukes, Chief Executive of 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.”
Protecting Your Business against Invoice Scams
Here’s a summary of Cifas and Action Fraud’s tips to protect your business from these scams:
Ensure all staff members from all departments, whether permanent or temporary, are aware of the fraud and never leave invoices unattended in the office or on a desk.
Establish at least two specific points of contact with suppliers so that all invoice changes can be confirmed with both contacts, and don’t respond to the contact details provided by someone requesting changes without first using these established email and telephone contacts to check that they are genuine.
Always check invoices for inconsistencies or errors
Contact suppliers for payment of larger invoices in advance to ensure that payment is made to the correct bank account.
Review what information is publicly available about your business – and how much of it should be
Ensure data held on your computer systems is secure and that antivirus software is up to date.
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