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Businesses warned about spike in invoice fraud during summer months

3-minute read

Businesses warned about spike in invoice fraud during summer months
Anna Delves

Anna Delves

12 August 2016

Almost half of small to medium sized businesses (SMEs) have been sent a suspicious invoice or fallen victim to invoice fraud over the last 12 months, according to a survey by invoice network Tungsten.

With false invoices, viruses disguised as bills or even the nerve to pose as suppliers over the phone, it's estimated small businesses are losing £9bn a year to fraud.

A ‘perfect ecosystem’ for fraud

And it's claimed that summer is a particularly common time for fraudsters to strike. As permanent staff take their holidays, less experienced staff or temps who are taking care of things are less likely to spot any discrepancies that might indicate a scam.

Small businesses have been warned to be particularly alert this summer as the current economic climate has meant conmen have an easier time preying on those looking to generate new business.

Hitesh Patel, UK forensic partner at KPMG, said “While economic conditions remain soft, it is unsurprising that commercial enterprises and investors are looking for new ways of making money, often dealing with people they have not encountered before.

“Two of the biggest frauds recorded this year progressed so far because the fraudsters were able to create a reputational illusion, convincing victim companies to hand over large amounts of money - often sums that materially impacted their ability to operate.

“As the environment for business continues to be tight and competitive, fraudsters are able to hide easily among genuine businesses.”

What to watch out for

Fraudsters will try anything to get at your money, and as technology evolves new and inventive cons will continue to pop up. This list covers some of the current most common types of fraud that impact small businesses.

1. Office supplies scams

An office supply scam is where telemarketers trick employees into ordering or paying for stationery. These are definite ones to watch out for over summer as the caller may try to mislead your temps into thinking that an order for office supplies has already been placed and that they are calling to chase up a signature for the order form to help them keep complete records.

You’ll then be sent and invoiced for unwanted, and often overpriced, stationery and office supplies. If you try to return the goods you’ll likely be told that you can’t because the form was signed and the order agreed over the phone.

2. Computer software service fraud

There are a number of computer software scams to look out for, from bogus tech support calls to fraudsters asking for payment information in order to ‘validate your software’.

Conmen will often use the names of well-known companies so make sure employees know to double check before giving out any personal information.

3. Phishing

Phishing is a type of con where fraudsters try to gain access to your personal information, often through email but sometimes over the phone.

While some scams are fairly obvious and easily spotted, there are other types of phishing that are more subtle. If you want to know more, you can read our guide to phishing and how to avoid it.

4. Mandate fraud

Along with invoice scams, mandate fraud is one of the types of fraud Tungsten warned small businesses against earlier this year.

It’s when someone gets you or one of your employees to change a direct debit, standing order or bank transfer mandate by pretending to be an organisation you make regular payments to, such as a subscription or membership organisation or one of your suppliers.

5. Invoice scams

This is another type of fraud that can often trip up new or temporary employees. Fraudsters send an invoice or bill to your company, requesting payment for goods or services, and an uninformed employee may pay them without checking the products have been received, especially if they’re posing as one of your regular suppliers.

To scare people into paying quickly, fraudsters may state on the invoice that the due date for the payment has passed, or threaten that non-payment will affect your credit rating.

6. Cheque overpayment

Cheque overpayment fraud is where you’re contacted to supply goods or services, but the cheque you receive is for a higher amount than the actual value of what you provided. The fraudster will then ask to be reimbursed for the overpayment, but will then cancel the cheque made out to you before it can be processed.

Have you been caught out by fraud? Let us know in the comments.

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We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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