News Article


Nearly one in three UK firms targeted by fraudsters in past eighteen months

By CreditMan Tuesday, August 31, 2010

Almost a third of UK businesses, (31 per cent), have been targeted by fraudsters over the past eighteen months, reveals recent research carried out by Graydon UK, the commercial credit referencing agency.

The survey also finds that 22 per cent of firms believe that the problem of commercial fraud is getting worse.

Martin Williams, Managing Director of Graydon UK, commented: “Fraud remains a persistent threat to business stability. Although fraud levels typically rise during economic downturns, measures like the 2006 Fraud Act, which was brought into force to improve conviction rates, and the setting up of the National Fraud Authority, appear to have made little impact.”

The research reports that the most common type of fraud experienced by UK businesses is that of fraudulent credit applications. These account for nearly half (45 per cent) of fraudulent incidents cited by survey respondents affected by fraud over the past eighteen months. Internet fraud also poses a significant threat, with 16 per cent of firms reporting that they have been affected, followed by 13 per cent who have been targeted by corporate hijackers.

The latest figures from the Ministry of Justice show that successful convictions brought against fraudsters in Magistrates’ Courts actually fell following the introduction of the Fraud Act in January 2007, from 14,300 in 2007 to 13,200 in 2008.

Martin Williams added: “Many UK businesses perceive, rightly or wrongly, that the police do not place white collar crime very high on their agenda and assume instead that companies will just write off the loss as another bad debt.

“The apparent failure of the Fraud Act to increase conviction rates significantly in either Crown or Magistrates’ Courts means that the authorities need to do more to tackle fraud and prove to businesses that they take this crime seriously by putting a real deterrent in place.

“The Government has already indicated that it is prepared to fight back against the benefit fraud that costs the taxpayer billions every year by using credit reference agencies to monitor citizens requesting benefits. It now needs to show the same level of commitment to address the problem of commercial fraud.”

Graydon UK has identified a number of steps that businesses can take to protect themselves against the threat of corporate fraud:

• Always obtain a credit report for customers and suppliers that does not simply regurgitate Companies House data but one that tracks and analyses unusual patterns of corporate behaviour in order to identify potential fraud
• Never set up a client account until their application has been fully processed
• Always check clients’ trading and registered office addresses
• Be wary of mobile phone numbers and non business e-mail addresses such as hotmail or yahoo
• Check whether your customers have a website when establishing their identity
• Most companies will pay their bills by completing a purchase order from their accounts department - make sure that you obtain a copy of this before sending an invoice
• When dealing with non incorporated businesses, always request original copies of utility bills quoting the delivery address
• Double check all delivery addresses, keeping a close eye on what sounds like residential addresses
• Check whether clients are VAT registered by calling the VAT Office for confirmation

It is also extremely important to flag certain events and details that seem out of the ordinary. Here are some examples of incidents which should alert firms to the possibility of fraudulent activity taking place:

• Is a sudden change of delivery address provided to you by the client?
• Is there a last minute call to collect the goods rather than have them despatched to the quoted delivery address?
• Is the delivery address given by the client shown on the credit report you obtained from your agency?
• Are the telephone numbers of the business you are dealing with fixed line or non geographic such as 0800 numbers?
• Have you received an order on the last afternoon of the month? Fraudsters, like credit managers, understand the pressure from the Sales Department!
• Look out for unusually large orders placed at the start of a new month, where a fraudster will anticipate that they have the longest timeframe before you chase for payment.
• Have you received a large first time order on a credit card? If so, be wary.