Invoice Fraud in the UK is one the increase according to a report by UK Finance. The report states that in 2018, businesses lost an average of £28,000, although a total of £29.6 million was returned to customers. Unfortunately, the report also says only (55%) of UK sole traders (55%), we’re aware of invoice fraud.
The number was a bit higher for large businesses, with 68% of small and medium enterprises (SME) saying they were aware of invoice fraud, while 84% of large businesses said they were well aware of invoice fraud.
Recovering money lost through invoice fraud, can be rather challenging and in some cases, almost impossible. The funds are usually transferred almost immediately withdrawn, once they get credited. In this article, we will take a detailed look at invoice fraud cases in the UK.
How Invoice Fraud Happens in the UK
Did you know that more than four out of ten businesses in the UK aren’t aware of invoice fraud? This is despite the fact that firms lost £93m in 2018, and in 2019, criminals stole £1.2 billion through fraud and scams from SMEs. The invoice fraud cases affect all businesses, including sole traders, small firms, and large companies.
Fraudsters Know About Your Business Dealings
The fraudsters always conduct detailed research to understand the relationship between suppliers and businesses. These invoice fraudsters are, therefore, aware of all relevant details, including when the regular payments are due.
Invoice Fraud is Often Detected Late
Most of the time, the fraud isn’t discovered until the legitimate supplier starts following up on the late payment. By this time, it’s always too late, and there is hardly anything you can do about it.
How Invoice Fraudster Access Information
Your company is always at risk of losing valuable data when it comes to invoicing fraud. These criminals can gain access to your company’s data using different malware. In some cases, these fraudsters get access to genuine email addresses, through inside contacts.
Low and High-Level Invoice Fraud
According to the FSB (Federation of Small Business), one in five of all high street shops are targeted by invoice fraudsters. Bakers, hairdressers, and butchers in the UK are all susceptible to bank scammers.
Furthermore, according to a report published by Tungsten, UK construction businesses lose about £1.8 billion every year due to invoice fraud.
There are also cases where banks refund customers money lost through invoice fraud. In the past year, Challenger bank TSB has been refunding customers who fell victim to invoice fraud.
The most recent victim of invoice fraud was an 83-year-old TSB customer whose email was compromised. The unsuspecting UK senior citizen ended up sending cement supplier payment to a fraudulent account.
What Businesses Can do to Stop Invoice Fraud
Businesses can take several measures to ensure that they get shielded from invoice fraud. Some of the critical actions that all companies need to take include the following:
- Ensuring that all the staff dealing with supplier invoices are vigilant to invoice fraud. There are several training classes and seminars that the staff could attend. All the staff with the authority to change supplier bank details need to understand certain red flags such as changes in addresses and the amount.
- Introducing a policy that expects all their staff to verify changes in supplier accounts by using the on-file details.
- Always informing the supplier immediately, payment has been processed. Doing this ensures that the supplier is aware of all the payment details, including the account.
- Checking their bank statements regularly. It should be a thorough check that highlights any suspicious debits and alerts the bank immediately.
- Removing sensitive payment information from publically available materials, including the website. Doing this will ensure that invoice fraudsters don’t get access to supplier data.
What individuals can do to Stop Invoice Fraud
Avoiding invoice fraud cannot be left to the business alone, and you have to help. Below are some of the initiatives that you can take as an individual to help your business avoid invoice fraud.
- Use the details on file to verify any amendment in supplier payment instructions. Understand that fraudsters can spoof email addresses to make them seem genuine. Using the contacts on file to verify changes in supplier accounts will ensure you stop any fraud from happening.
- Sometimes fraudsters request changes over a phone call. In such situations, then politely ask them whether you can reach them using their details held on file. Doing this ensures you take charge of the situation, thereby stopping invoice fraud at its tracks.
- Scrutinize all invoices by cross-checking with the previous invoices. Ensure that you carefully inspect the bank account details, logo, and wording used. Do this whenever you receive any invoice to ensure you are always one step of fraudsters.
- Inform your superior whenever a supply makes any account changes. Sometimes you might not spot an invoicing fraud while your colleague might. It’s always good practice to keep your firm updated whenever there are any changes.
What the UK Government is Doing to Stop Invoice Fraud
The UK government has instituted certain measures to shield companies from invoice fraud. Action Fraud, operated by the City of London Police, is an online portal that lets you report any fraud instances affecting you.
The reports that you send through Action Fraud are analyzed and collated by the NFIB (National Fraud Intelligence Bureau). An individual police force is then deployed to take a closer look at the invoice fraud once the analysis is done.
The NFIB sends industry alerts whenever they detect any new techniques or methods being used by fraudsters. Doing this ensures that UK businesses and citizens are well shielded from invoice fraud.
Conclusion – Stopping Invoice Fraud
Invoice fraud can be avoided easily with proper measures put in place. You must ensure that all your employees are aware of invoice fraud, and how to deal with them. Reducing the number of employees that can change supplier payment details is also a great idea.
Vigilance is crucial when you want to avoid invoice fraud. Most of the time, you can stop invoice fraud, if you are aware it exists. When all the employees practice vigilance, then invoice fraud becomes a thing of the past.
Be on the lookout for NFIB alerts, to ensure that you are always updated whenever these fraudsters change their techniques or methods.