UK businesses lost a total of nearly £93m to invoice fraud last year, at a cost of £28,000 on average per case. Yet less than half of small businesses are aware of this type of scam, and even fewer protect themselves against it.
There were 3,280 invoice and mandate scams in 2018 according to data collated by UK Finance, totalling £92.7m. Just £29.6m of the money lost was returned to the business customers affected.
Criminals target businesses by posing as a regular supplier of goods or services but making a request for their bank details to be changed to pay the latest invoice. The unsuspecting business, if it does not make additional checks on the changes, will end up paying the fraudster instead of the supplier as expected.
Don’t think for a second it is easy to spot this type of fraud either. These criminals are sophisticated. The invoices are hard to spot as fakes, and they will even steal data to determine when those invoices are paid, if they are regular payments, to make the request seem more authentic.
The awareness of these types of scams is relatively low across the board. The largest companies – the most likely to be targeted – having the highest awareness. That said, a considerable number of other businesses of all sizes have been hit by invoice fraud. Some 9% of micro-businesses, those with 1-9 employees, have been victims of invoice fraud, rising to 12% for small businesses with 10-49 employees, and to 17% for medium-sized companies with 50-249 employees.
Yet when you consider that the average case is worth £28,000 – enough of a loss to sink many small businesses – relatively few companies are doing anything to protect themselves. Less than half of all these types of businesses take any measures at all to prevent invoice fraud, leaving them wide open to devastating losses.
SMEs need to get to grips with the potential for this to hurt them, and take action to protect themselves. So here are four golden rules from UK Finance on how you can prevent your company being hit by this type of scam:
Always confirm any bank account details directly with the company either on the telephone or in person before you make a payment or transfer any money.
Criminals can access or alter emails to make them look genuine. Do not use the contact details in an email, instead check the company’s official website or documentation.
If you are making a payment to an account for the first time, transfer a small sum first and then check with the company using known contact details that the payment has been received to check the account details are correct.
Contact your bank straight away if you think you may have fallen victim to an invoice or mandate scam.
Source: Take Five to Stop Fraud campaign
In addition, you should ensure any member of staff that deals with invoices is aware of the possibility of invoice fraud. It could save your business.