Professionals warn of scammers impersonating regulatory authorities!

18 December 2024

Fraud is now so prevalent within business that it is endemic and the level of sophistication such that scammers are even impersonating the regulator!

A survey of 200 professional credit managers who are on the front line of fighting fraud showed that more than four out of five (81%) say their organisations have experienced fraud this year with two out of five (40%) saying the frequency of attempted frauds has increased.

The most common frauds relate to impersonation, either of an individual or a firm. Businesses are sent invoices to pay from an e-mail address they recognise but are not actually from the client.

Short-firm fraud is also an issue, whereby a fake business conducts a legitimate transaction to build trust with the supplier and increase their credit limit. They then ‘sting’ the supplier with a much larger transaction and disappear with the goods left unpaid.

One credit manager reported that his firm had received an email purporting to come from the Financial Conduct Authority (FCA) requesting bank details to issue refunds. The incident was reported to the FCA. Another told of a request for payment being received for a trademark renewal and patent protection that was entirely bogus, and based on the premise that the firm would not know when a trademark was about to expire.

Sue Chapple, Chief Executive of the Chartered Institute of Credit Management (CICM) who conducted the research, says that firms need to be vigilant: “The scams are becoming increasingly sophisticated to the point of impersonating the regulator and it takes the skills of a professional credit manager to keep their organisations safe from harm.

“Firms should of course be on the lookout for any unusual activity in the coming weeks, especially emails that appear to be from legitimate contacts but may relate to invoice values that are unusually high or where the contact wants to be paid quickly.”

Another unusual fraud is being targeted specifically at debt collection agencies. Agencies are contacted by a new potential client and passed several high value invoices for collection. ‘Debtors’ then contact the agency within hours of receiving the first communication, looking to settle the debt by card. The client then contacts the agency to get the money owed (minus the commission) as quickly as possible.

“While none of our members have lost money this way so far, it shows how imaginative the scammers have become,” Sue continues. “The warning signs on this occasion are perhaps more obvious: debtors are rarely so keen to pay back any money they owe, or so quickly, and the amounts are nearly always large, but smarter, less pushy scammers who instruct agencies to collect smaller amounts certainly require our members to be on top of their game.”

Sue says awareness is key: “We need to continue raising awareness among businesses of the types of scams that are in operation and sharing best credit management practice in strengthening a firm’s monitoring systems, refining their detection strategies, and engaging with the relevant authorities who are themselves being duped.”

According to CIFAS research conducted in October, more than half of UK large businesses fear fraud will impact their organisations. A PWC Fraud Report found that £72,000 is lost by businesses in over 51% of fraud cases.