Monday 27th October, 2014

A report in This is Money, has highlighted the dangers small businesses face from a  surge in invoice fraud in which conmen try to dupe firms into handing over hundreds of thousands of pounds.

Financial Fraud Action UK has reported a rise in the scam with hundreds falling victim in the last year. The fraudsters send in fake requests for payment which look legitimate, often via e-mail or letter, with new payment details.

In an all too common example of the way invoice fraud is carried out, the FFA UK highlighted the recent case of a manufacturer based in Norfolk.

Believing the e-mail to be from their longstanding supplier, they amended the details accordingly. Unfortunately, they made a payment for £350,000 straight to the fraudsters account before realising the mistake. They were unable to recover the money lost.

Small businesses do not have the same level of protection as personal banking customers and are expected to have a higher level of responsibility.

Unfortunately, only small businesses with fewer than ten staff members or turnover under £2million can resort to an Ombudsman, if banks refuse to refund them in fraud cases.

The FFA UK says although the scam above happened via e-mail, often it will be by letter, with official logos, legitimate contact details and other tricks to make it as convincing as possible.

Alternatively, the fraudsters will phone and ask to update details. In all cases, the scammers will have done their homework and take advantage of any transaction complexity within an organisation's accounts department.

FFA UK warns criminals will know existing suppliers and use that information to make their fraud convincing as possible.

Police say the following industries are being targeted harder than others: agriculture, construction, manufacturing, legal, accountancy, retail, pharmaceuticals, energy and publishing.