Business directory fraud
Your business may receive a form in the post, by email or fax, appearing to offer free listings in a business directory. You will be asked to return the order form even if you decline to place an order. However, in the small print it states that by returning the form, you are committing to an order and will pay for ongoing entries in the directory. This will then cost your business hundreds of pounds a year.
An increasingly common scam occurs where businesses are contacted by telephone offering advertising space in a publication which is allegedly linked with the emergency services, linked to a recognised trade body or purports to be an industry specific magazine.
In some cases companies are sent a glossy copy of the magazine to encourage the placing of an advert. However, often these magazines are not actually printed in bulk or distributed - and if they are, the circulation list is not at the level described. In some instances businesses have received debt recovery letters for adverts they did not agree to place.
Ensure you do your research before agreeing to anything.
Procurement fraud is on the increase. Your employees may be trusted with certain procurement responsibilities which can provide opportunities to commit fraud. Identifying the risks is difficult, but a common sense approach is essential.
What you should know
It’s possible for an employee to create a record for a fictitious company or a legitimate company that does not provide services to your business. This provides an opportunity to transfer money to the recipient, controlled by either the employee or an outsider.
Customer fake invoice scams occur when fraudsters send an invoice or bill to a company, requesting immediate payment for goods or services. The invoice might say that the due date for payment has passed and threaten that non-payment will affect credit rating. In fact, the invoice is fake and is for goods and services that haven’t been ordered or received.
An employee could also intercept and alter payee details and amounts on cheques and Payable Orders, then attempt to cash them.
Suppliers may try to encourage business by offering anything of value to influence a business decision.
Your employee may self-authorise payments for themselves or there may be collusion with employees and suppliers to gain contracts.
There may be conflicts of interest. An employee may have a financial interest in the success of a particular supplier but their goods and services may be at a higher rate which may be detrimental to your business.
Minimise your risk to fraud
Never change payment details on the basis of a telephone call or email. If you do receive such a call, verify with an existing contact that this is correct before processing any new changes.
Ensure that there is a need for the goods or service being provided.
Review your accounts on a regular basis to identify any anomalies in your payment processes.
Empower staff to identify and challenge inappropriate behaviour.
Office supply fraud
This fraud type occurs where telemarketers trick employees into ordering and paying for stationery, such as toner cartridges.
The caller may mislead a company’s employee into thinking an order for office supplies has already been placed, either by an existing or former colleague. To further convince them it is genuine, the caller states they are chasing up a signature to complete the order.
The company is then invoiced for unwanted, and often overpriced, stationery and office supplies.
If the company tries to return the goods, they are told that returns are not possible because the order form has been signed and the order was agreed over the phone.
If a member of your staff has a responsibility to purchase office equipment, consider due diligence. Always refer back to your existing contacts within the business and if they are not regularly known to you conduct further checks. A risk-based approach will help prevent fraud.