Contractors warned of multi-million pound invoice fraud
Contractors have been warned to be on the lookout for fake invoices, which cost the UK economy up to £100m a year.
Money order fraud, also known as payment diversion fraud, typically involves a criminal contacting a business posing as a supplier and requesting that payments be sent to a new bank account. The North East Business Resilience Center (NEBRC), a non-profit organization, has warned construction companies that fraudsters are becoming increasingly sophisticated. Scammers contact companies with email addresses identical to those used by a real company, along with email signatures and disclaimers to match.
The practice is estimated to cost businesses in the UK economy more than £100million a year, according to the National Crime Agency. Businesses were nicked for around £27,700 on average. However, in one case, a construction company was defrauded of £1.1million.
Superintendent of Police Rebecca Chapman (pictured), who heads the NEBRC, said business dealings in the construction industry make it a prime target for fraudsters: ‘Warrant fraud targeting construction companies is becoming more increasingly common as the nature of the industry with complex supply chains, multiple third-party contractors and a fast-paced working environment often means there is little time to verify genuine inquiries that come in via email,” she said.
The NEBRC cited the case of a Yorkshire-based contractor with a turnover of £3million a year who had sought a ‘substantial’ payment from a customer only to be told his invoice had already been paid. Further investigation revealed that the client had received an email from someone claiming to be from the Yorkshire company, telling them that the company’s bank details had changed. The client then transferred the money to this new bank account, which belonged to the criminal.
In 2019, Speller Metcalfe, released details of two fraud cases where his customers had been contacted by someone claiming to be from the contractor to tell them that Speller Metcalfe had a new bank account for payments.
In one instance, payment to the fake bank account was avoided when Speller Metcalfe pursued a late payment and the customer said he was sent new bank details to send it. In the second case, a purchasing ledger clerk at a client noticed a discrepancy in the address given for Speller Metcalfe on a letter claiming that the contractor had a new bank account. They spoke to the CFO, who contacted the contractor, confirming the fraud attempt.
The company said in a statement at the time: “The industry is increasingly aware of warrant fraud and it is by raising awareness that we can help others. [avoid] fall into an easy trap.
Superintendent Chapman said that NEBRC can advise businesses on how to protect themselves against fraud. “It only takes a split second for a staff member to unwittingly authorize money order fraud, and criminals won’t take any time at all to transfer money from customers and genuine bank accounts,” he said. she declared.
The National Crime Agency recommends verifying bank details before making payments. And if new account information was provided, contact the recipient using the existing contact information and not the information provided on the account change notice.