Avoid the ‘new account’ fraudsters

In November 2008 the Business and Enterprise Committee made up of a number of MPs, published a report about Companies House.

Like many people, the MPs were taken aback to find that data filed there by companies, accountants etc was not checked and validated. A strong recommendation was made that Companies House should take urgent steps to explain to the public that it cannot guarantee the accuracy of the information it holds.

They stated “It is understandable- but wrong- that some users of its services assume that, because CH is an agency of government,its data can be relied upon to be authoritative- it cannot”.

Unfortunately fraudsters and criminals are well aware of the lack of validation at Companies House. They can easily file fictitious balance sheets,directorships, and registered office changes in order to fool the public and unsuspecting suppliers. Some credit agencies such as D&B, Experian and Graydon do run checks for fraud or unusual records at Companies house, but most other credit agencies don’t. Many just take Companies House data in good faith and add a credit rating to it.

You cannot rely upon this !!

Do your own background checks, have they got a website? Is the company mentioned on other peoples websites? Can you speak to a reliable reference who has dealt with the company?

Protect Your Business From Invoice Scams

Paying on phony invoices is an occupational risk for small businesses. They are regularly the target of scammers hoping to take advantage of sloppy bookkeeping, inattention on the part of employees and poor communications between the people in the firm ordering goods, those receiving them and those approving payment. All too often they are paid unwittingly along with a number of other routine bills.

Scammers have fake invoice production for such things as stationery or cleaning services, down to a fine art. Their invoice will include names (perhaps established by a prior phone call to the business for some innocuous seeming information), figures, and other details that add up to an authentic looking invoice. And they have a range of scams other than fake invoices – solicitations for the purchase of goods or services carefully designed to look like invoices for items already received; payment for listing in a directory of some sort you never agreed to; asserting that there is a government requirement for the services offered when no such requirement exists, and phony advertising to renew an ad allegedly placed ‘last year’ … to cite just a few. Scammers are business smart in other ways and will often send bogus invoices in the summer when many permanent employees are away and temporary personnel are covering operations.

The best protection against invoice scammers is knowledge and vigilance.  Your company’s accounting department, or the individuals responsible for paying accounts, should be made aware of the different types of scams and how they work and you need to have a set of internal controls in place that will pick up fake invoices before payment is made. These include:

  • Not placing orders over the telephone unless there is no doubt that the firm you are dealing with is reputable

  • Always ask for a phone order to be followed up with the offer in writing

  • Check your records to confirm claims of previous business dealings

  • Channel all invoices through one department

  • Read your mail carefully. Warn employees to be on the alert for any unusual invoices.

  • Use pre-numbered purchase orders for every order placed

  • Check all invoices against purchase orders and against goods or services received

  • Verify all invoices with the person who gave written or verbal authorisation for purchase

  • Limit the number of people who can pay invoices to just one or two

  • Never give out or clarify any information about your business unless you know what the information will be used for

In many cases the amount of the invoice is just small enough to slip by the cheque writer’s attention. Invoice scammers build up considerable experience in calculating the most effective amount to place on the invoice, depending on variables such as the size of the firm and the control it seems to have over its management system. Thousands of mass-mailed invoices, each for a small sum, may prove more lucrative for the con artist than several large invoices. It is believed that invoice scammers succeed in collecting a significant percentage of all the bills they mail. While it’s impossible to put an exact figure on it, business bureaus speculate that scam invoices cost the SME sector millions each year.