UK firms lose £93m to invoice fraud

George Hay Chartered Accountants

More than four in 10 UK businesses are unacquainted with the potential risks that are associated with invoice fraud, according to a survey conducted by UK Finance.[1]

Invoice scams are characterised by fraudsters who pose as regular suppliers and trick businesses into sending money to an account controlled by them rather than the genuine supplier.

Often the criminals will try to acquire sensitive details from businesses, such as the date when regular payments are due, to make their initial approach more convincing.

In 2018, this type of fraudulent activity cost UK firms a little under £93 million, with 3,280 instances reported – costing on average £28,000 per case.

Fortunately, last year, £29.6 million of the money lost to this type of fraud was returned to business customers.

UK Finance’s survey indicated that 84 per cent of large businesses were aware of the threat of invoice fraud, compared with 68 per cent of small businesses and just 55 per cent of sole traders.

Although smaller firms were less likely to have been targeted, they were also much less likely to have taken appropriate steps to protect themselves against any potential scams of this nature.

Managing Director of Economic Crime at UK Finance, Katy Worobec, said: “Invoice fraud could happen to businesses of all sizes. 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.”

Financial Fraud Action UK, part of UK Finance, is responsible for the ‘Take Five to Stop Fraud’ campaign.

The campaign, which is backed by the government and delivered through a range of partners, is designed to encourage businesses to stop and consider whether the situation they find themselves in is ‘genuine’.

The advice to businesses wanting to protect themselves from these scams is:

  • Always confirm bank account details directly with the company you are dealing with, either on the telephone or in person before you move any money;
  • Use a single point of contact with businesses where regular payments are made and liaise with them regularly;
  • Criminals can access or alter emails to make them look genuine. To this end, you should train staff to check invoices thoroughly, for small changes in logos or typesetting and fonts, indicators of the paperwork having been scanned and contact details changing subtly;
  • Do not use the contact details in an email, instead check the company’s official website or documentation if you are unsure;
  • 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;
  • Set a payment threshold, where exceeding the level requires authorisation;
  • Consider an authorisation process, as a ‘second check’, when changing the account details of a supplier on your accounting software or database;
  • Contact your bank or accountant immediately if you think you may have fallen victim to an invoice or mandate scam.

If you’re concerned about any communications you have received in relation to your financial or tax affairs, or if you’d like to discuss how you can protect yourself against these types of scams, contact us today.