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Avoid business fraud
Fraudsters could be targeting your business right now. As it becomes harder to scam individuals and as big business takes fraud prevention more and more seriously, the fraudsters’ attention is turning to small businesses. If you’re reading this, that could mean you.
By Sandra Rubidge-Killion, fraud liaison manager, D&B.
There are, however, a few simple steps you can take to protect your business. First, regularly check for any changes in the details that Companies House and reputable business information suppliers hold about your business. If you see any information you haven’t authorised, your business identity may well have been hi-jacked.
Know your customers. It takes more than a cursory check with Companies House to assess whether to deliver a business goods or service on credit. Use a reputable credit reference agency to investigate new and potential customers. They will have the systems in place to determine whether your new customer is a fraud risk.
Finally, educate your staff about the risk of fraud. Make sure your sales team knows what to look for when signing up new customers. And ensure all your credit and delivery staff know what to do and who to tell if they suspect fraudulent activity.
All sounds pretty easy, right? But all too often, when it comes to our businesses’ money, it seems our instincts to fight fraud evaporate.
With our own cash we all take basic, sensible precautions: we shred documents, avoid dodgy looking websites, check over our bank statements and use our chip and pin credit cards. Now it’s time more of us started doing the same when we’re at work.
There are no official figures detailing what fraud costs British businesses. There is as yet no central office in the UK charged with fraud prevention, and the government simply does not keep the statistics. However, estimates for company ID theft alone put the figure at up to £100 million a year, and rising.
The two biggest business fraud risks are corporate ID theft and long firm fraud.
Corporate ID theft is where a fraudster uses another business’s details to obtain goods or services, and unfortunately it is a remarkably easy fraud to perpetrate. Incredibly, genuine director details and registered offices can be changed at Companies House without a company’s knowledge.
All of which makes approaches to creditors by a fraudster look genuine, but there is no way of gaining payments or receiving goods. The estimated costs to UK industry are staggering and the problem is getting worse.
Thankfully, Companies House and the Metropolitan Police have at last joined forces to reduce the risk of a company’s details being illicitly changed. This won’t put a stop to fraudsters impersonating companies, but it will make it harder.
Long Firm Fraud occurs when a business is set up purely to obtain goods without paying for them. The fraudster will target businesses, quickly setting up credit accounts with as many vendors as possible.
By making small, regular payments, sometimes even paying before the due dates, the fraudster will build up the vendors’ confidence and trust.
They will then place several large orders, disappearing as soon as the goods are received. This particular fraud is especially popular in the run up to Christmas, as the holiday season gives the fraudster more time to disappear.
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